August 24, 1999 (The Editor’s Desk is updated each business day.)

Largest drop ever in prices of crude materials in 1998

The Producer Price Index for crude materials fell by 16.7 percent in 1998. This was the biggest annual decline ever in the series, which began in 1947.

[Chart data—TXT]

Prices for crude materials excluding food and energy decreased last year by almost as much as the overall index: down 16.0 percent. In recent years, it has been unusual for these two indexes to move in such a similar fashion. As shown in the chart, in each year from 1994 to 1997, there was at least a 9-percentage-point difference between the movements of these indexes.

Of all crude materials excluding food and energy, scrap metals experienced some of the largest reductions in prices in 1998. For example, the index for iron and steel scrap plunged by 39.9 percent. Food and energy prices in the PPI for crude materials also retreated in 1998. The foodstuffs and feedstuffs index declined by 11.0 percent and the energy index dropped by 23.8 percent.

PPI data come from the BLS Producer Price Index program. More information is available in the BLS publication "PPI Detailed Report: Data for 1998." Annual percent changes are December-to-December changes. The relative importance of materials besides food and energy in the crude materials PPI was 29.2 percent as of December 1998. Note that this edition of The Editor’s Desk updates some of the figures in an article that appeared here earlier this year: "Producer prices edged down 0.1 percent in 1998" (1/14/99). The Producer Price Index has been revised since the earlier article originally appeared.