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PPI is indicative of a general rise in American produce

US Producer Price Index (PPI) for final demand increased 0.6 per cent in October, which indicates that prices are going up for American produce.

For reference, final demand prices moved up 0.5 per cent in September and 0.7 per cent in August. Over 60 per cent of the October increase in the index for final demand can be traced to a 1.2 per cent rise in prices for final demand goods.

The index for final demand services moved up 0.2 per cent and prices for final demand construction advanced 6.6 per cent. Prices for final demand less foods, energy, and trade services moved up 0.4 per cent in October after increasing 0.1 per cent in September.

For the 12 months ended in October, the index for final demand less foods, energy, and trade services rose 6.2 per cent.

Final demand goods

The index for final demand goods moved up 1.2 per cent in October following a 1.3 per cent increase in September. In October, three-quarters of the advance can be attributed to a 4.8 per cent jump in prices for final demand energy while the index for final demand goods less foods and energy moved up 0.5 per cent.

Conversely, prices for final demand foods decreased 0.1 per cent. One-third of the October advance in the index for final demand goods can be traced to prices for gasoline, which rose 6.7 per cent.

The indexes for diesel fuel, fresh and dry vegetables, gas fuels, jet fuel, and plastic resins and materials also moved higher. In contrast, prices for beef and veal decreased 10.3 per cent. The indexes for light motor trucks and for residential electric power also fell.

In accordance with usual practice, most new-model-year passenger cars and light motor trucks were introduced into the PPI in October.

Final demand services

Prices for final demand services moved up 0.2 per cent in October, the tenth consecutive advance. Nearly two-thirds of the increase in October can be attributed to the index for final demand trade services, which rose 0.4 per cent.

Prices for final demand transportation and warehousing services advanced 1.7 per cent. Conversely, the index for final demand services less trade, transportation, and warehousing fell 0.1 per cent.

Over 80 per cent of the October increase in prices for final demand services can be traced to margins for automobiles and automobile parts retailing, which rose 8.9 per cent. The indexes for apparel, footwear, and accessories retailing; truck transportation of freight; food and alcohol retailing; hospital outpatient care; and machinery and equipment parts and supplies wholesaling also moved up.

In contrast, prices for securities brokerage, dealing, investment advice, and related services fell 6.6 per cent. The indexes for fuels and lubricants retailing and for portfolio management also declined

Intermediate Demand by Commodity Type

Within intermediate demand in October, prices for processed goods moved up 2.1 per cent, the index for unprocessed goods increased 8.4 per cent, and prices for services rose 0.2 per cent. The index for processed goods for intermediate demand advanced 2.1 per cent in October, the largest rise since climbing 2.9 per cent in May.

About two-thirds of the October increase can be traced to prices for processed energy goods, which moved up 7.3 per cent. The index for processed materials less foods and energy rose 1.1 per cent.

Conversely, prices for processed foods and feeds fell 0.9 per cent. For the 12 months ended in October, the index for processed goods for intermediate demand advanced 25.4 per cent, the largest 12-month increase since jumping 26.3 per cent in January 1975. Nearly 30 per cent of the October increase in the index for processed goods for intermediate demand can be attributed to a 14.2 per cent rise in prices for diesel fuel.

The indexes for utility natural gas, cold rolled steel sheet and strip, gasoline, jet fuel, and hot rolled steel sheet and strip also moved higher. In contrast, prices for beef and veal fell 10.3 per cent. The indexes for primary basic organic chemicals and for commercial electric power also decreased.

Unprocessed goods for intermediate demand

The index for unprocessed goods for intermediate demand rose 8.4 per cent in October, the seventh consecutive increase. Leading the advance in October, prices for unprocessed energy materials jumped 23.3 per cent.

The index for unprocessed nonfood materials less energy moved up 1.1 per cent. Conversely, prices for unprocessed foodstuffs and feedstuffs fell 3.8 per cent. For the 12 months ended in October, the index for unprocessed goods for intermediate demand surged 56.6 per cent.

In October, nearly three-fourths of the rise in prices for unprocessed goods for intermediate demand can be traced to a 33.7 per cent jump in the index for natural gas. Prices for crude petroleum, recyclable paper, raw cotton, coal, and fresh vegetables (except potatoes) also moved higher. In contrast, the index for corn decreased 7.6 per cent. Prices for slaughter hogs and for hides and skins also declined.

Services for intermediate demand:

The index for services for intermediate demand moved up 0.2 per cent in October, the 11th consecutive advance. Over three-fourths of the October increase can be attributed to a 0.7 per cent rise in margins for trade services for intermediate demand.

The index for transportation and warehousing services for intermediate demand climbed 0.8 per cent. Conversely, prices for services less trade, transportation and warehousing for intermediate demand edged down 0.1 per cent.

For the 12 months ended in October, the index for services for intermediate demand advanced 7.4 per cent. Over half of the October rise in prices for services for intermediate demand can be traced to a 1.7 per cent advance in margins for machinery and equipment parts and supplies wholesaling.

The indexes for building materials, paint, and hardware wholesaling; staffing services; business loans (partial); truck transportation of freight; and paper and plastics products wholesaling also increased. In contrast, prices for securities brokerage, dealing, investment advice and related services fell 6.6 per cent.

The indexes for fuels and lubricants retailing and for services related to air transportation also declined.