Producer Price Index: The U.S. Bureau of Labor Statistics’ Producer Price Index (PPI) for final demand grew 0.8% in February 2022 (seasonally adjusted), following the 1.2% increase in January. The index for final demand goods grew 2.4% in February, the largest advance since December 2009, while the index for final demand services were unchanged. Nearly 40 percent of the February increase in prices for final demand goods can be attributed to the index for gasoline, which rose 14.8 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. February’s 3MMA was 301.17, representing a change of +2.26% month over month (3MMA m/m). The 3MMA is steadily rising again after stalling last September.

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. February’s 3MMA was 239.32, representing a change of +0.32% m/m. Like construction, the 3MMA for manufacturing is steadily rising.

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.