Producer Price Index
Producer Price Index: The U.S. Bureau of Labor Statistics’ Producer Price Index (PPI) for final demand fell 0.5% in July 2022 (seasonally adjusted), following the 1.0% increase in June. The index for final demand goods fell 1.8% in July, while the index for final demand services grew 0.1% after a 0.3% increase in June. Eighty percent of the July decline in the index for final demand goods is attributable to gasoline prices, which fell 16.7 percent.
Figure 1 shows the PPI for materials and components of construction, with the three-month moving average (3MMA) on the left-hand axis and monthly percent change of the 3MMA on the right. July’s 3MMA was 351.31, representing a change of +0.34% month over month (3MMA m/m). The 3MMA has been steadily increasing since the beginning of the year.
Figure 2 shows the PPI for materials and components of manufacturing, with the 3MMA on the left-hand axis and monthly percent change of the 3MMA on the right. July’s 3MMA was 250.05 representing a change of +0.42% m/m. The 3MMA has been steadily increasing after a slight dip in February.
At Gerdau, we monitor the PPI – issued monthly by the U.S. Bureau of Labor Statistics – because it is an unbiased, reliable measure of inflation. The PPI can better inform business decisions by providing a framework for contract adjustment, forecasting, inventory valuation, and as an overall economic indicator.