Producer Price Index YoY

Producer Price Index YoY compares the Final Demand headline index with its level 12 months earlier, from the seller view. It tracks selling prices received by domestic producers across mining, manufacturing, agriculture, utilities, nearly 70% of services revenue and selected construction. For trade it tracks gross margins, the gap between selling and buying prices, and it excludes imports, taxes, tariffs and owners' equivalent rent. It began in 1902 as the Wholesale Price Index until 1978, then moved to the Final Demand-Intermediate Demand system with January 2014 data.

Prices are set for the Tuesday of the week containing the 13th and reported online, with late reporters contacted by phone. It is released monthly after the reference month, usually in the second full week at 8:30 a.m. Eastern Time on preannounced dates. Each release brings Table A, a same-day Detailed Report and database files, with indexes revised 5 times to a final value 4 months later. Rises signal inflation and falls signal easing; use seasonally adjusted data for trends and unadjusted data for YoY and contracts.

Final demand splits into goods, services at about 65.5%, and construction.

• Final demand goods, 33%: selling prices of physical goods for final use, including foods and energy goods.
• Final demand services, 65.5%: wholesaler and retailer margins, transport and warehousing, and other services for final demand.
• Final demand construction, 1.5%: prices for new nonresidential construction output.

March 2022 data, released April 13, 2022, showed final demand up 1.4% on the month (seasonally adjusted) and 11.2% over 12 months. The 12-month rise was the largest since 12-month data began in November 2010. Core less foods, energy and trade services rose 0.9% on the month and 7.0% over 12 months, so volatile parts added about 4 points. Goods rose 2.3% on energy at 5.7% and foods at 2.4%, while services rose 0.9% on trade margins at 1.2% and transport at 5.5%. Diesel jumped 20.4% and fuel retail margins 22.7%, yet beef fell 7.3% and brokerage 5.4%.

1. Sample and collection: The Bureau of Labor Statistics samples establishments and items by probability, favoring larger firms, then collects prices for the pricing Tuesday online. Large moves are checked and confirmed.
2. Quality adjustment: The same item terms are priced over time, and any specification change is bridged so only pure price change counts. For high tech goods, statistical models called hedonic regressions value the quality gap.
3. Missing prices: Missing prices are imputed, or filled in, from the average change of reported items in the same narrow index cell.
4. Index formula: Cell prices are combined with a modified Laspeyres formula, which holds base quantities fixed and lets prices vary, weighted by shipment values. Toy example with values 180 and 80 and price ratios of 1.20 and 1.05 gives (216 + 84) / 260 x 100 = 115.385.
5. Weights: Weights come from national economic census shipment values, refreshed about every 5 years, and appear as relative importance shares updated each December. Industry indexes use net output weights, which avoid double counting, while commodity indexes use gross weights, which can double count.
6. Reference bases and seasonal adjustment: Most older commodity series use 1982 = 100; Final Demand indexes use November 2009 = 100. Seasonal patterns are removed with X-13 ARIMA software, a Census seasonal tool, and industry indexes are never adjusted. Factors are refit each January over 5 years.
7. Year over year change: The YoY figure uses unadjusted indexes: (I(M) minus I(M minus 12)) / I(M minus 12) x 100, to 1 decimal. Toy continuation: (115.385 minus 110.000) / 110.000 x 100 = 4.9%.