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July 2002, Vol. 125, No. 7

Producer price highlights during 2001

William F. Snyders, Jon Weinhagen, and Amy Popick

The Producer Price Index (PPI) for Finished Goods declined 1.6 percent in 2001, the largest calendar year decrease since a 2.3-percent drop in 1986. This index rose 3.6 percent in 2000, and 2.9 percent in 1999. Finished goods are commodities that are ready for sale to the final-demand user, either an individual consumer or a business firm. The majority of the 2001 decline in finished goods prices can be traced to a 17.1-percent drop in finished energy prices. Excluding energy, the index for finished goods advanced 1.2 percent in 2001. Following a 1.7-percent gain in the prior year, the index for finished consumer foods rose 1.8 percent in 2001. Prices for finished goods less foods and energy—a category that includes both consumer goods and capital equipment—increased 0.9 percent in 2001, following a 1.3-percent advance throughout the previous 12 months.

Prices for commodities at the overall crude and intermediate stages of processing also experienced declines for the 2001 calendar year. The PPI for intermediate materials, supplies, and components fell 4 percent in 2001, after posting a 4.1-percent gain in 2000. Intermediate goods in the PPI reflect material inputs to the manufacturing process, as well as various supplies consumed in the production process. Prices for crude materials for furthering processing dropped 32.5 percent, following a 35.5-percent jump in the prior calendar year. Crude goods are unprocessed goods that are primarily outputs from mining industries and agricultural production.

This excerpt is from an article published in the July 2002 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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