The slower rate of decrease in finished goods prices was led by the index for energy goods, which fell 9.3 percent in December after declining 11.2 percent in November. Prices for finished goods other than foods and energy rose 0.2 percent in December compared with a 0.1- percent increase in the preceding month. By contrast, partially offsetting the slower rate of decline in the finished goods index, prices for consumer foods moved down 1.5 percent following no change in November.
Before seasonal adjustment, the Producer Price Index for Finished Goods decreased 1.9 percent in December to 168.8 (1982 = 100). In 2008, finished goods prices fell 0.9 percent compared with a 6.2-percent advance in 2007. The 2008 downturn is mostly attributable to energy prices, which dropped 20.3 percent after rising 17.8 percent a year earlier. Price increases for finished consumer foods slowed to 3.7 percent in 2008 from 7.6 percent in 2007. Conversely, the index for finished goods other than foods and energy advanced 4.3 percent in 2008 following a 2.0-percent gain in the preceding year. At the earlier stages of processing, prices received by manufacturers of intermediate goods fell 1.7 percent in 2008 after rising 7.1 percent in the prior year, and the crude goods index dropped 25.0 percent following a 19.8-percent jump in 2007.
Finished goods
The index for finished energy goods fell 9.3 percent in December after decreasing 11.2 percent in November. Prices for liquefied petroleum gas moved down 21.8 percent in December following a 33.4-percent drop a month earlier. The index for residential natural gas also declined less than it had in November, and prices for finished lubricants turned up in December. By contrast, partially counteracting the slower rate of decrease in the index for finished energy goods, prices for residential electric power increased 0.3 percent compared with a 1.4-percent advance in November. The indexes for kerosene, home heating oil, and diesel fuel fell more than in the prior month. Gasoline prices decreased 25.7 percent for the second consecutive month.
The index for finished goods other than foods and energy increased 0.2 percent in December after edging up 0.1 percent in November. In December, higher prices for passenger cars, pharmaceutical preparations, light motor trucks, and civilian aircraft outweighed lower prices for consumer plastic products; storage units, files, and tables; alcoholic beverages; and power and distribution transformers.
The index for finished consumer foods declined 1.5 percent in December after no change in November. Prices for fresh and dry vegetables dropped 14.9 percent compared with a 3.8-percent rise in the preceding month. The indexes for beef and veal, packaged fluid milk, and canned fruits and juices also turned down in December. Prices for citrus fruits increased less than in November, and the index for chewing gum was unchanged after rising in the previous month. By contrast, prices for natural cheese (except cottage) advanced 3.4 percent in December following a 5.0-percent decline in the prior month. The index for noncarbonated soft drinks also turned up after decreasing a month earlier. Prices for pork and eggs for fresh use fell less than they had in November.
Intermediate goods
Following a 4.3-percent drop in November, the Producer Price Index for Intermediate Materials, Supplies, and Components fell 4.2 percent in December. This decrease was broad based, with prices for energy goods, materials for both nondurable and durable manufacturing, materials and components for construction, and foods and feeds all declining in December. The index for intermediate goods excluding foods and energy posted a record decline for the third straight month in December - 3.0 percent. This index fell 2.3 percent in November and 1.7 percent in October.
The index for intermediate energy goods decreased 9.5 percent in December following a 12.3-percent drop in November. Price declines for utility natural gas slowed in December to 1.6 percent from 4.9 percent in the prior month. The indexes for residual fuel and liquefied petroleum gas also fell less than they had in November. Prices for industrial electric power and finished lubricants turned up in December. By contrast, partially offsetting the slower rate of decrease in the intermediate energy goods index, jet fuel prices declined 16.8 percent after moving down 11.6 percent in November. The indexes for diesel fuel and kerosene also fell more in December than they had in the previous month. Prices for commercial electric power rose less than in November. The index for intermediate energy goods decreased 19.8 percent in 2008 after increasing at the same rate in 2007.
The index for materials for nondurable manufacturing dropped 9.1 percent in December following an 8.5-percent decline in November. In December, lower prices for basic organic chemicals, plastic resins and materials, phosphates, rubber and rubber products, inedible fats and oils, processed yarns and threads, and surface active agents outweighed higher prices for basic inorganic chemicals and knit gray fabrics. The index for materials for nondurable manufacturing decreased 3.6 percent in 2008 after climbing 12.8 percent in 2007.
The index for materials for durable manufacturing fell 7.2 percent in December following a 6.2-percent decline in November. Prices for cold rolled steel sheet and strip dropped 16.6 percent in December after moving down 5.4 percent a month earlier. The indexes for hot rolled steel sheet and strip, plastic resins and materials, basic organic chemicals, semifinished steel mill products, and cold finished steel bars also decreased more than they had in November. Conversely, price declines for nonferrous wire and cable slowed to 2.9 percent in December from 10.8 percent in the preceding month. The indexes for primary nonferrous metals; hot rolled steel bars, plates, and structural shapes; and copper and brass mill shapes also fell less than they had in November. Prices for materials for durable manufacturing decreased 5.5 percent in 2008 following a 1.7-percent advance in 2007.
The index for materials and components for construction declined 1.2 percent in December after decreasing 1.1 percent in November. In December, lower prices for steel mill products, paving mixtures and blocks, plastic construction products, nonferrous wire and cable, fabricated structural metal, prefabricated wood buildings and components, and sheet metal products outweighed higher prices for architectural coatings and millwork. The index for materials and components for construction rose 7.3 percent in 2008 following a 2.0-percent increase in 2007.
Prices for intermediate foods and feeds fell 3.4 percent in December after declining 2.4 percent in November. The index for corn, cottonseed, and soybean cake and meal decreased 1.8 percent following a 9.1-percent advance in November. Prices for beef and veal and for packaged fluid milk and related products also turned down in December. The indexes for processed eggs, bulk fluid milk and cream, shortening and cooking oils, and flour fell more in December than they had in the prior month. Conversely, price declines for formula feeds slowed to 4.7 percent in December from 9.3 percent in November. The index for pork also decreased less than it had in the previous month, while prices for natural cheese (except cottage cheese) turned up in December. Prices for intermediate foods and feeds increased 3.4 percent in 2008 after climbing 17.2 percent in 2007.
Crude goods
The Producer Price Index for Crude Materials for Further Processing fell 5.3 percent in December after declining 12.5 percent in November. Prices for crude energy materials and crude nonfood materials less energy decreased less than they had in November. Conversely, partially offsetting the slower rate of decline in crude materials prices, the index for crude foodstuffs and feedstuffs fell at a faster rate compared with the prior month.
The index for crude energy materials decreased 6.0 percent in December after dropping 18.7 percent a month earlier. Coal prices edged down 0.3 percent subsequent to a 0.5-percent decline in November. Prices for natural gas advanced 14.7 percent in December following a 10.9-percent decrease in the previous month. By contrast, the crude petroleum index moved down 31.0 percent after falling 30.2 percent in the prior month. In 2008, prices for crude energy materials declined 33.5 percent following a 16.2-percent advance in 2007.
The crude nonfood materials less energy index declined 2.2 percent in December subsequent to a 20.4-percent drop a month earlier. Nonferrous scrap prices moved down 9.2 percent following a 25.4-percent decrease in November. The indexes for iron and steel scrap, wastepaper, gold ores, and plant and animal fibers turned up after declining in the prior month. By contrast, the phosphates index moved down 21.6 percent in December following a 7.6-percent decrease a month earlier. Prices for hides and skins also fell at faster rates compared with the previous month, and the index for soybeans turned down in December. The crude nonfood materials less energy index declined 24.3 percent in 2008 compared with a 15.6-percent gain in 2007.
Prices for crude foodstuffs and feedstuffs decreased 5.3 percent in December after moving down 1.2 percent in the preceding month. Leading this faster rate of decline, the slaughter cattle index fell 8.9 percent following a 2.4-percent increase in November. Prices for fresh vegetables (except potatoes) and soybeans also turned down in December. The indexes for fluid milk, corn, and wheat declined more than they had a month earlier. By contrast, prices for slaughter hogs advanced 4.6 percent after moving down 15.8 percent in November. The index for slaughter chickens rose more than it had a month earlier. Prices for Irish potatoes for processing increased following no change in the prior month, and the index for slaughter turkeys fell less than it had in November. In 2008, crude foodstuffs and feedstuffs prices moved down 14.3 percent following a 24.9-percent jump in 2007.
