Producer Price Index: The U.S. Bureau of Labor Statistics’ Producer Price Index (PPI) for final demand increased 0.7% in January 2023 (seasonally adjusted), following the 0.2% decrease in December. The index for final demand goods moved up 1.2% in January, while the index for final demand services advanced 0.4%, the same as in December. Nearly one-third of the January rise in the index for final demand goods can be traced to prices for gasoline, which increased 6.2 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. January’s 3MMA was 349.53, representing a change of -0.24% month over month (3MMA m/m). The 3MMA has been steadily decreasing since October.

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. January’s 3MMA was 237.47 representing a change of -0.36% m/m. The 3MMA has been consistently decreasing since August.

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.