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-Editorial
Wholesale prices fell in July for the first time in two years as a plunge in energy prices slowed the pace of inflation, the Bureau of Labor Statistics stated in a report released on Aug. 11.
The Producer Price Index for final demand fell 0.5 percent in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported last week. This decline followed advances of 1.0 percent in June and 0.8 percent in May. On an unadjusted basis, final demand prices moved up 9.8 percent for the 12 months ended in July.
In July, the decrease in the index for final demand is attributable to a 1.8-percent decline in prices for final demand goods. In contrast, the index for final demand services advanced by 0.1 percent.
Prices for final demand for fewer foods, energy, and trade services moved up 0.2 percent in July following a 0.3-percent rise in June. For the 12 months ended in July, the index for final demand for fewer foods, energy, and trade services increased by 5.8 percent.
Final demand goods: The index for final demand goods fell 1.8 percent in July, the largest decline since moving down 2.7 percent in April 2020. The July decrease can be traced to a 9.0-percent drop in prices for final demand energy. Conversely, the indexes for final demand foods and final demand goods fewer foods, and energy rose 1.0 percent and 0.2 percent, respectively.
Product detail: Eighty percent of the July decline in the index for final demand goods is attributable to gasoline prices, which fell 16.7 percent. The indexes for diesel fuel, gas fuels, oilseeds, iron and steel scrap, and grains also moved lower. In contrast, prices for chicken eggs jumped 43.1 percent.
The indexes for industrial chemicals and electric power also increased.
Final demand.
Final demand services: The index for final demand services inched up 0.1 percent in July, the third consecutive increase.
Leading the July advance, margins for final demand trade services rose 0.3 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services moved up 0.4 percent. Conversely, final demand services less trade, transportation, and warehousing decreased 0.1 percent.
Product detail: Leading the July increase in prices for final demand services, margins for fuels and lubricants retailing rose 12.3 percent. The indexes for services related to securities brokerage and dealing (partial), hospital outpatient care, automobiles and automobile parts retailing, and transportation of passengers (partial) also moved higher. In contrast, prices for portfolio management declined 7.9 percent. The indexes for securities brokerage, dealing, and investment advice; food and alcohol retailing; and long-distance motor carrying also fell.
Intermediate Demand by Commodity Type.
Within intermediate demand in July, prices for processed goods decreased 2.3 percent, the index for unprocessed goods fell 12.4 percent, and prices for services advanced 0.1 percent. The index for processed goods for intermediate demand fell 2.3 percent in July, the largest decline since moving down 3.4 percent in April 2020.
Most of the broad-based decrease in July can be traced to a 9.0-percent drop in prices for processed energy goods. The indexes for processed materials fewer foods and energy and for processed foods and feeds also moved lower, 0.2 percent and 0.1 percent, respectively. For the 12 months ended in July, prices for processed goods for intermediate demand increased 17.4 percent.
Product detail: Over half of the July decline in the index for processed goods for intermediate demand is attributable to a 16.6-percent decrease in prices for diesel fuel. The indexes for gasoline; utility natural gas; cold rolled steel sheet and strip; liquefied petroleum gas; shortening, cooking oil, and margarine also fell. Conversely, prices for industrial chemicals advanced 1.9 percent. The indexes for commercial electric power and beef and veal also moved higher.
Unprocessed goods for intermediate demand: Prices for unprocessed goods for intermediate demand fell 12.4 percent, the largest decline since moving down 14.4 percent in April 2020. Most of the broad-based decrease in July is attributable to a 21.2-percent drop in the index for unprocessed energy goods. Prices for unprocessed nonfood materials less energy and unprocessed foodstuffs and feedstuffs also declined, 6.9 percent and 0.8 percent, respectively. For the 12 months ended in July, the index for unprocessed goods for intermediate demand increased 27.5 percent.
Product detail: Over half of the July decrease in prices for unprocessed goods for intermediate demand can be traced to a 27.6-percent decline in the index for natural gas. Prices for crude petroleum, grains, iron and steel scrap, oilseeds, and nonferrous metal ores also fell. In contrast, the index for slaughter hogs jumped 23.2 percent. Prices for coal and recyclable paper also rose.
