Producer Prices Rise 9.7% for 2021, the Most in Series History

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by Mish Shedlock, The Street:

Producer prices continue to run hot, especially services. Final demand for good fell for the month of December.

The BLS Producer Price Report for December 2021 shows the strongest price increases since the series began in 2010.

Key Points

  • The Producer Price Index for final demand increased 0.2 percent in December. This rise followed advances of 1.0 percent in November and 0.6 percent in October.

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  • On an unadjusted basis, final demand prices moved up 9.7 percent in 2021, the largest calendar-year increase since data were first calculated in 2010.
  • In December, the advance in the final demand index can be traced to a 0.5-percent increase in prices for final demand services.
  • Conversely, the index for final demand goods decreased 0.4 percent.
  • Prices for final demand less foods, energy, and trade services rose 0.4 percent in December following a 0.8-percent increase in November.
  • In 2021, the index for final demand less foods, energy, and trade services moved up 6.9 percent, following a 1.3-percent advance in 2020.

PPI Final Demand vs CPI 

PPI Final Demand vs CPI YOY 2021-12

Final Demand Services

  • Prices for final demand services rose 0.5 percent in December following a 0.9- percent increase in November.
  • Over half of the broad-based advance in December is attributable to margins for final demand trade services, which moved up 0.8 percent.
  • Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services rose 0.2 percent and 1.7 percent, respectively.
  • Over a quarter of the December increase in the index for final demand services can be attributed to margins for fuels and lubricants retailing, which rose 13.0 percent. T
  • Margins for automobile and automobile parts retailing decreased 2.7 percent.

Final Demand Goods

  • The index for final demand goods moved down 0.4 percent in December, the first decrease since falling 2.8 percent in April 2020.
  • Leading the December decline, prices for final demand energy dropped 3.3 percent.
  • The index for final demand foods fell 0.6 percent.
  • Prices for final demand goods less foods and energy advanced 0.5 percent.
  • A major factor in the December decrease in prices for final demand goods was the index for gasoline, which moved down 6.1 percent.
  • Prices for meats, gas fuels, fresh and dry vegetables, diesel fuel, and primary basic organic chemicals also declined. In contrast, the index for ethanol increased 6.4 percent.
  • Prices for residential electric power and for chicken eggs also moved higher.

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