Producer price highlights, 1998 (EXCERPT), Monthly Labor Review Online, July 1999

Producer price highlights, 1998

William D. Thomas and Joseph Kowal

The Producer Price Index (PPI) for Finished Goods showed no change in 1998, after falling 1.2 percent in 1997 and rising 2.8 percent in 1996. The 1997–98 period marked the first time since 1947—the earliest year for which data are available—that this index failed to show an increase over a 2-year span. Within finished goods, prices for finished goods other than foods and energy—a category that includes both consumer goods and capital equipment—increased 2.5 percent in 1998, after showing no change a year earlier. The index for consumer foods rose 0.1 percent in 1998, after decreasing 0.8 percent in 1997. However, the index for finished energy goods fell 11.7 percent, after declining 6.4 percent over the previous 12 months. (See table 1.)

At the earlier stages of processing, the PPI for Intermediate Materials, Supplies, and Components fell 3.3 percent, after declining 0.8 percent a year earlier. This index measures price movements for goods such as flour, steel, lumber, industrial chemicals, diesel fuel, and paper boxes and containers. Similarly, prices for crude goods for further processing also fell in 1998, declining 16.7 percent, after falling 11.3 percent in 1997. Crude goods include commodities such as wheat, slaughter cattle, crude petroleum, natural gas, scrap metals, logs and timber, and cotton. Prices for energy- and food-related materials at both the intermediate and crude stages of processing fell more in 1998 than in 1997. Excluding foods and energy, the intermediate index turned down in 1998, after moving up 0.3 percent in 1997. For crude nonfood materials less energy, a 16.0-percent decline in 1998 followed no change in the previous year.

This excerpt is from an article published in the July 1999 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.

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