The Producer Price Index (PPI) for final demand in the US increased by 0.1 per cent in July, according to the US Bureau of Labor Statistics (BLS).

This follows a 0.2 per cent rise in June and no change in May. Over the 12 months leading up to July, the index for final demand rose by 2.2 per cent on an unadjusted basis.

The July increase in the index for final demand was primarily driven by a 0.6 per cent rise in prices for final demand goods. In contrast, prices for final demand services fell by 0.2 percent during the same period.

Excluding the volatile categories of foods, energy, and trade services, the index for final demand increased by 0.3 per cent in July, following a 0.1 per cent increase in June. Over the year ending in July, this core index (excluding foods, energy, and trade services) rose by 3.3 per cent.

Final demand goods

Prices for final demand goods increased by 0.6 per cent in July, the largest rise since a 1.1 per cent jump in February. The increase was broad-based, with nearly 60 per cent of it attributed to a 1.9 per cent rise in the index for final demand energy.

Additionally, prices for final demand goods excluding foods and energy went up by 0.2 per cent, and final demand foods rose by 0.6 per cent. Regarding specific products, a quarter of the overall increase in final demand goods was due to a 2.8 per cent rise in gasoline prices.

Other notable increases were seen in the prices of diesel fuel, meats, jet fuel, fresh fruits and melons, and basic organic chemicals. On the other hand, prices for electric power fell by 1.1 per cent, and the indexes for fresh and dry vegetables and steel mill products also declined.

Final demand services

In July, prices for final demand services decreased by 0.2 per cent, marking the largest drop since March 2023. This decline was primarily driven by a 1.3 per cent decrease in the index for final demand trade services, which measures changes in the margins received by wholesalers and retailers. 

Conversely, prices for final demand services, excluding trade, transportation, and warehousing, rose by 0.3 percent, while prices for transportation and warehousing services increased by 0.4 percent. In terms of specific services, the most significant decline was in the margins for machinery and vehicle wholesaling, which fell by 4.1 per cent. 

Other notable decreases were observed in food and alcohol retailing, automobile retailing (partial), automotive fuels and lubricants retailing, desktop and portable device application software publishing, and physician care. On the other hand, prices for portfolio management services saw a 2.3 percent increase. 

Additionally, the indexes for chemicals and allied products wholesaling and truck transportation of freight also experienced rises.