Economic News Release

Transmission of material in this release is embargoed until                          USDL-09-1399
8:30 a.m. (EST), Tuesday, November 17, 2009

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                              PRODUCER PRICE INDEXES - OCTOBER 2009


The Producer Price Index for Finished Goods advanced 0.3 percent in October, seasonally 
adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed a 0.6-percent 
decline in September and a 1.7-percent rise in August. In October, at the earlier stages of 
processing, prices received by manufacturers of intermediate goods moved up 0.3 percent and 
the crude goods index increased 5.4 percent. On an unadjusted basis, from October 2008 to 
October 2009, prices for finished goods fell 1.9 percent, the eleventh consecutive month of year-
over-year declines. (See table A.)

Stage-of-Processing Analysis

Finished goods

The October increase in the index for finished goods can be attributed to higher prices for energy 
and food, both of which moved up 1.6 percent. By contrast, prices for finished goods other than 
foods and energy declined 0.6 percent.

Finished energy:  The index for finished energy goods advanced 1.6 percent in October 
compared with a 2.4-percent drop in the previous month. Almost half of the increase can be 
traced to the gasoline index, which climbed 1.9 percent. Rising prices for residential electric 
power and liquefied petroleum gas also contributed to the advance in the finished energy goods 
index. (See table 2.)

Finished foods:  Finished consumer food prices rose 1.6 percent in October after edging down 
0.1 percent a month earlier. Accounting for about half of the increase, the index for fresh and dry 
vegetables jumped 24.2 percent. Higher prices for fresh fruits and melons also contributed to the 
advance in the finished consumer foods index.

Finished core:  In October, the index for finished goods less foods and energy moved down 0.6 
percent, its second consecutive decrease. Lower prices for light motor trucks and passenger cars 
led the October decline, falling 5.2 percent and 0.5 percent, respectively. In accordance with 
usual practice, most new-model-year passenger cars and light motor trucks were introduced into 
the PPI in October. (See Report on Quality Changes for 2010 Model Vehicles, USDL 09-1400.) 

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components moved up 0.3 
percent in October, its third straight monthly advance. The October rise can be traced to higher 
prices for intermediate energy goods, which climbed 2.3 percent. By contrast, the indexes for 
both intermediate goods less foods and energy and for intermediate foods and feeds decreased 
0.2 percent. On a 12-month basis, prices for intermediate goods fell 7.5 percent in October. This 
is the third consecutive month of slowing year-over-year declines following a record 15.1-
percent drop for the 12 months ended July 2009.  (See table B.)  

Intermediate energy:  The index for intermediate energy goods advanced 2.3 percent in 
October after falling 2.1 percent in September. About one-fifth of this increase can be traced to a 
5.5-percent rise in diesel fuel prices. Higher prices for natural gas to electric utilities and 
commercial electric power also contributed to the advance in the intermediate energy goods 
index. (See table 2.) 

Crude goods

The Producer Price Index for Crude Materials for Further Processing increased 5.4 percent in 
October after falling 2.1 percent in September. For the 3-month period ending in October, crude 
material prices rose 7.1 percent after advancing 4.1 percent in the 3 months ending in July. The 
monthly October rise was broad based, with prices for crude energy materials jumping 8.3 
percent, the index for crude foodstuffs and feedstuffs moving up 5.2 percent, and prices for crude 
nonfood materials less energy increasing 0.5 percent. (See table B.) 

Crude energy:  The index for crude energy materials increased 8.3 percent in October. From 
July to October, this index rose 9.5 percent, compared with an 11.8-percent rise in the 3 months 
ending in July. Accounting for about sixty percent of the monthly October increase, the natural 
gas index moved up 16.3 percent. Higher prices for both crude petroleum and coal also 
contributed to the advance in the crude energy materials index. (See table 2.)

Crude foods:  The index for crude foodstuffs and feedstuffs increased 5.2 percent in October.  
This index moved up 2.4 percent in the most recent 3-month period compared with a 6.0-percent 
decline in the previous 3-month period. In October, a 9.0-percent rise in the grains index led the 
advance in the crude foodstuffs and feedstuffs index. Higher prices for slaughter poultry were 
also a factor in this increase.

Crude core:  The index for crude nonfood materials less energy rose 0.5 percent in October, and 
10.4 percent for the 3 months ending in October. Similarly, for the 3 months ending in July, 
prices climbed 10.8 percent. A major contributor to the monthly October increase was the gold 
ores index, which rose 5.4 percent.  

Services Analysis

Trade industries: The Producer Price Index for the Net Output of Total Trade Industries was 
unchanged in October after falling in each of the previous three months. (Trade indexes measure 
changes in margins received by wholesalers and retailers.) In October, higher margins received 
by merchant wholesalers of nondurable goods and new car dealers were offset by lower margins 
received by merchant wholesalers of durable goods and gasoline stations with convenience 
stores.
 
Transportation and warehousing industries: The Producer Price Index for the Net Output of 
Total Transportation and Warehousing Industries moved up 0.6 percent in October following a 
0.7-percent decline in September. About two-thirds of this advance can be attributed to a 2.8-
percent increase in prices received by the industry for scheduled passenger air transportation. 
The industry indexes for couriers and line-haul railroads also rose in October.

Traditional service industries: The Producer Price Index for the Net Output of Total 
Traditional Service Industries advanced 0.5 percent in October after declining 0.2 percent in 
September. Leading this upturn, prices received by the commercial banking industry moved up 
2.0 percent. The industry indexes for general medical and surgical hospitals and for investment 
banking and securities dealing also advanced in October.  
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The Producer Price Index for November 2009 is scheduled to be released on Tuesday, 
December 15, 2009 at 8:30 a.m. (EST).