Producer Price Indexes - December 2007

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Producer Price Indexes - December 2007

The Producer Price Index for Finished Goods declined 0.1 percent in December,
seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported
today. This decrease followed a 3.2-percent rise in November and a 0.1-percent advance in
October. At the earlier stages of processing, prices received by producers of intermediate goods
fell 0.2 percent in December after increasing 3.7 percent in the prior month, and the crude goods
index moved up 1.0 percent following an 8.7-percent jump in November. (See table A.)

Table A. Monthly and annual percent changes in selected stage-of-processing price
indexes, seasonally adjusted
r=revised. Some of the figures shown above and elsewhere in this release may differ
from those previously reported because data for August 2007 have been revised to
reflect the availability of late reports and corrections by respondents.


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The downturn in prices for finished goods was led by the index for energy goods, which
dropped 1.9 percent in December after climbing 14.1 percent in November. Prices for finished
goods other than foods and energy rose 0.2 percent in December compared with a 0.4-percent
advance in the preceding month. By contrast, partially offsetting the downturn in the finished
goods index, prices for finished consumer foods increased 1.3 percent following no change in
November.

Before seasonal adjustment, the Producer Price Index for Finished Goods declined 0.4
percent in December to 170.6 (1982 = 100). In 2007, finished goods prices moved up 6.3
percent compared with a 1.1-percent advance in 2006. This faster rate of increase in 2007 is
attributable to food and energy prices. The index for finished energy goods surged 18.4 percent
in 2007 after falling 2.0 percent a year earlier, and prices for finished consumer foods jumped 7.4
percent following a 1.7-percent rise in 2006. Alternatively, the index for finished goods other
than foods and energy advanced 2.0 percent in 2007, the same as in the preceding year. At the
earlier stages of processing, prices received by manufacturers of intermediate goods climbed 6.8
percent in 2007 after moving up 2.8 percent in the prior year, while the crude goods index
jumped 20.6 percent following a 4.7-percent decrease in 2006. (See summary table below.)

Summary of December-to-December and 3-month seasonally adjusted annual rates for
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Finished goods

The index for finished energy goods fell 1.9 percent in December after rising 14.1 percent
in November. Leading this downturn, gasoline prices declined 4.8 percent in December
following a 34.8-percent surge a month earlier. The indexes for home heating oil, diesel fuel,
liquefied petroleum gas, asphalt, and kerosene also decreased after advancing in November.
Prices for residential electric power moved up less in December than in the previous month. By
contrast, partially counteracting the downturn in the index for finished energy goods, prices for
residential natural gas fell 0.1 percent compared with a 5.2-percent drop in November. (See
table 2.)

The index for finished goods other than foods and energy increased 0.2 percent in
December following a 0.4-percent rise in November. In December, higher prices for
pharmaceutical preparations, cosmetics and other toilet preparations, civilian aircraft,
commercial furniture, cigarettes, pet food, and floor coverings outweighed lower prices for
passenger cars, light motor trucks, household furniture, and for x-ray and electromedical
equipment.

The index for finished consumer foods climbed 1.3 percent in December after no change
in November. Prices for fresh and dry vegetables jumped 13.4 percent in December compared
with a 13.2-percent drop in the preceding month. The indexes for beef and veal and for
processed fruits and vegetables also turned up in December. Prices for fresh fruits and melons
and for eggs for fresh use increased more than they had in November. By contrast, the index for
processed turkeys fell 9.4 percent in December following an 8.7-percent rise in the prior month.
Prices for pork and roasted coffee also decreased after advancing in November. The indexes for
bakery products, finfish and shellfish, and processed young chickens increased at slower rates in
December than they had a month earlier.

Table B. Monthly and annual percent changes in selected price inde

r=revised. Some of the figures shown above and elsewhere in this release may differ
from those previously reported because data for August 2007 have been revised to
reflect the availability of late reports and corrections by respondents.


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Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components
decreased 0.2 percent in December following a 3.7-percent advance in November. Leading this
downturn, prices for intermediate energy goods and materials for durable manufacturing declined
after rising a month earlier. The index for materials for nondurable manufacturing rose less than
it had in the preceding month. By contrast, partially offsetting the downturn in intermediate
goods prices, the index for intermediate foods and feeds advanced more than it had a month
earlier, and prices for materials and components for construction turned up in November. The
index for intermediate goods less foods and energy was unchanged in December following a 1.0-
percent decrease in the prior month. (See table B.)

The index for intermediate energy goods declined 1.4 percent in December subsequent to
a 13.3-percent advance in November. Diesel fuel prices moved down 3.0 percent after surging
35.8 percent in the preceding month. The indexes for gasoline, home heating oil, both
commercial and industrial electric power, and liquefied petroleum gas also turned down in
December. Prices for jet fuels rose less than they had a month earlier, and the index for natural
gas to electric utilities fell more than it had in November. By contrast, prices for commercial
natural gas increased 0.6 percent following a 6.0-percent decline in the previous month. The
index for industrial natural gas also turned up in December. (See table 2.) From December 2006
to December 2007, prices for intermediate energy goods advanced 18.6 percent after decreasing
3.3 percent a year earlier.

Prices for materials for nondurable manufacturing edged up 0.1 percent in December
subsequent to a 3.6-percent rise in November. The index for processed yarns and threads moved
up 0.2 percent following a 1.0-percent gain in the preceding month. Prices for basic organic
chemicals, plastic resins and materials, and for paint materials declined after increasing in the
prior month. By contrast, the rate of increase for the inedible fats and oils index quickened from
4.4 percent in November to 9.5 percent in December. Prices for fertilizer materials and basic
inorganic chemicals also advanced more than they had a month earlier. The paperboard index
inched up subsequent to a decline in the previous month. The index for materials for nondurable
manufacturing advanced 13.0 percent in 2007 compared with a 1.2-percent rise in 2006.

Prices for materials for durable manufacturing decreased 1.0 percent in December
following a 1.1-percent advance in November. The primary nonferrous metals index fell 8.5
percent after rising 2.5 percent in the prior month. Prices for thermoplastic resins, building paper
and board, and aluminum mill shapes also turned down in December. The indexes for both cold
and hot rolled steel sheet and strip rose less than in the preceding month. By contrast, prices for
softwood lumber moved down 0.6 percent compared with a 3.8-percent decrease a month earlier.
The index for copper and brass mill shapes also declined less than it had in the previous month,
and prices for titanium mill shapes turned up in December. In 2007, the index for materials for
durable manufacturing moved up 1.6 percent subsequent to a 12.5-percent jump in 2006.

The advance in the intermediate foods and feeds index accelerated from 1.2 percent in
November to 2.2 percent in December. Prices for beef and veal moved up 3.2 percent compared
with a 5.0-percent decline a month earlier. The indexes for flour and for refined sugar and
byproducts also turned up in December. Prices for shortening and cooking oils advanced more
than in the preceding month, while the index for dry milk products fell less than it had in
November. By contrast, prices for prepared animal feeds increased 1.7 percent in December
following a 3.7-percent advance in the prior month. Similarly, prices for processed young
chickens also rose less then they had in November. The pork index turned down in December,
and prices for fluid milk products declined more than they had in the previous month. From
December 2006 to December 2007, the index for intermediate foods and feeds climbed 17.5
percent subsequent to a 4.7-percent increase a year earlier.