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Tag Archives: Producer Price Index

How Timing and World Events Affect Price Statistics

Rising prices have certainly been in the news lately, and we have received a lot of questions about BLS price statistics. Some questions, however, are “evergreen.” Even in times of moderate price changes, BLS staff often hear that the Consumer Price Index (CPI) doesn’t reflect an individual’s experience. We address this concern and a wide range of other issues in our Questions and Answers about the CPI:

Q. Whose buying habits does the CPI reflect?

A. The CPI does not necessarily measure your own experience with price change. It is important to understand that BLS bases the market baskets and pricing procedures for the CPI-U and CPI-W populations on the experience of the relevant average household, not of any specific family or individual. For example, if you spend a larger-than-average share of your budget on medical expenses, and medical care costs are increasing more rapidly than the cost of other items in the CPI market basket, your personal rate of inflation may exceed the increase in the CPI. Conversely, if you heat your home with solar energy, and fuel prices are rising more rapidly than other items, you may experience less inflation than the general population does. A national average reflects millions of individual price experiences; it seldom mirrors a particular consumer’s experience.

Beyond the differences in individual spending habits, price statistics are affected by a variety of factors, including world events and the timing of price data collection. To explore these factors, we will look beyond the CPI to all BLS price indexes. We’ll focus on the price of oil and related items. Let’s start with a reminder of what is included in the BLS family of price indexes and look at how oil-related prices changed in March.

  • The Consumer Price Index measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
    • The CPI for gasoline (all types) rose 18.3 percent in March and 48.0 percent over the last 12 months.
    • The CPI for energy rose 11.0 percent in March and 32.0 percent over the last 12 months.
  • The Producer Price Index (PPI) measures the average change over time in the selling prices domestic producers receive for their output.
    • The PPI for crude petroleum rose 7.2 percent in March and 62.2 percent over the last 12 months.
    • The PPI for petroleum refineries rose 17.0 percent in March and 62.1 percent over the last 12 months.
    • The PPI for fuels and lubricants retailing rose 22.7 percent in March and 40.0 percent over the last 12 months.
  • The Import and Export Price Indexes show changes in prices of nonmilitary goods and services traded between the United States and the rest of the world.
    • The Import Price Index for crude petroleum rose 15.6 percent in March and 62.0 percent over the last 12 months.
    • The Export Price Index for crude petroleum rose 19.1 percent in March. (This is a new measure, and we haven’t yet tracked it over 12 months.)

National or international events, whether started by Mother Nature or human action, affect the prices businesses and consumers pay for goods and services. We’ve seen this in the past with weather disruptions, such as hurricanes along the Gulf Coast that shut down oil drilling and refining. Current prices may be influenced by the war in Ukraine, the embargo on Russian oil, and other events around the world.

We can see the influence of these events in price changes throughout the production and distribution of oil-related goods and services. BLS estimates the changes in the prices that domestic producers receive through the PPI; this includes petroleum-related industries such as drillers and refiners and the margins on gasoline station sales. Gasoline retailers make money on the margins of their sales—the difference between how much they pay for the fuel they buy from wholesalers and the prices they receive from consumers. Margins for gas stations typically decline when oil prices increase. To learn more, see “As crude oil plunges, retail gasoline margins spike, then retreat.”

Some domestic producers import oil rather than purchase it domestically, and the Import Price Index reflects changes in prices they pay. Some domestic producers also export petroleum-related products, which is captured in Export Price Indexes. Ultimately, consumers purchase gasoline, home heating oil, and other petroleum-based products, and often producers pass price changes on to consumers. Thus, an increase in oil prices can result in higher costs at the pump, more expensive airline fares, and price increases for goods transported by trucks. The CPI reflects these higher prices consumers may face.

The price of oil and related products can change rapidly, adding to the challenges of collecting and publishing timely price statistics. Ideally, BLS would collect prices throughout the month for all goods and services in all price indexes. While that is a long-term goal, it is not simple to implement. Currently, BLS identifies the official “pricing date” for each index, as follows:

  • We collect prices for the CPI throughout the month, with each outlet (such as a gas station) assigned one of three pricing periods, which roughly correspond to the first 10 days, second 10 days, and third 10 days of the month. Once established, prices are updated each month during the same pricing period.
  • We collect prices for most items in the PPI as of the Tuesday of the week containing the thirteenth day of the month. This is the case for the petroleum-related items. (Some items in the PPI have prices collected throughout the month.)
  • We obtain import price data for petroleum from the U.S. Department of Energy. We obtain export price data for petroleum from secondary source market prices. These data represent a weighted average of imported and exported oil throughout the month.

Let’s look at the price of oil over the past few months and how the BLS pricing dates might affect the price indexes.

Daily price per barrel of West Texas Intermediate Crude, January to March 2022

Editor’s note: Data for this chart are available in the table below.

The chart shows the volatility of the oil prices, particularly in March. When the February CPI was released on March 10, West Texas Intermediate Crude Oil prices had already soared from $96 per barrel on the last day of February to over $123 two days before the CPI release. While consumers were feeling the pinch at the pump, this steep rise was not reflected in the February CPI data. Similarly, both the February and March PPI price dates (February 15 and March 15) missed the large run-up in oil prices in the first week of March. The Import Price Index, Export Price Index, and CPI did include the highest prices seen in early March, however.

BLS price indexes represent averages—average selections of goods and services, average weights, and typically average time periods. Over time, these indexes provide an accurate view of price change throughout the economy. But during periods of rapidly changing world events, and corresponding rapid changes in the price of individual commodities (and oil in particular), the index pricing periods may miss unusual highs and lows.

Daily price per barrel of West Texas Intermediate Crude, January to March 2022
DateDollars per barrel

Jan 3

$75.99

Jan 4

77.00

Jan 5

77.83

Jan 6

79.47

Jan 7

79.00

Jan 10

78.11

Jan 11

81.17

Jan 12

82.51

Jan 13

81.97

Jan 14

83.82

Jan 18

85.42

Jan 19

86.84

Jan 20

86.29

Jan 21

85.16

Jan 24

84.48

Jan 25

86.61

Jan 26

88.33

Jan 27

87.61

Jan 28

87.67

Jan 31

89.16

Feb 1

88.22

Feb 2

88.16

Feb 3

90.17

Feb 4

92.27

Feb 7

91.25

Feb 8

89.32

Feb 9

89.57

Feb 10

89.83

Feb 11

93.10

Feb 14

95.52

Feb 15

92.07

Feb 16

93.83

Feb 17

91.78

Feb 18

91.26

Feb 22

92.11

Feb 23

92.14

Feb 24

92.77

Feb 25

91.68

Feb 28

96.13

Mar 1

103.66

Mar 2

110.74

Mar 3

107.69

Mar 4

115.77

Mar 7

119.26

Mar 8

123.64

Mar 9

108.81

Mar 10

105.93

Mar 11

109.31

Mar 14

103.22

Mar 15

96.42

Mar 16

94.85

Mar 17

102.97

Mar 18

104.69

Mar 21

112.14

Mar 22

111.03

Mar 23

114.89

Mar 24

114.20

Mar 25

116.20

Mar 28

107.55

Mar 29

104.25

Mar 30

107.81

Mar 31

100.53

What Have You Been Looking for on the BLS Website?

In 2021, the BLS public website welcomed nearly 29 million users, who viewed just over 158 million pages. Wow, that’s a lot of data! It shows the extensive and growing interest in information about our economy. Let’s take a quick look back over the past year. What are the topics of interest? We see clear trends and a few surprises.

From its humble beginnings more than a quarter century ago, www.bls.gov has become the primary way we make the latest BLS data and analysis available to the public.

BLS website homepage, September 1995
First edition of the BLS website, 1995

Today, thousands of users get their first glimpse of the latest economic data through the website or through email alerts and tweets that link to the website. National economic news on employment, inflation, productivity, and other topics is first available on the website, with about 150 national releases each year. Not to be outdone, BLS regional office staff around the country last year posted nearly 1,000 regional and local news releases on the website.

And you came to check out those data—all 29 million of you.

Here’s a look at the five subject homepages that saw the greatest increase in page views from 2020 to 2021. You’ll note that all are timely topics.

  • The Business Response Survey to the Coronavirus Pandemic was a special data collection effort. Information from this survey was first available late in 2020, so the 166-percent increase in page views in 2021 is not surprising, especially given the great interest in all COVID-19 information. Results from a second round of this survey, with updated questions, will be available February 9, 2022.
  • Information from the Consumer Price Index also had more than a 100-percent increase in page views from 2020 to 2021, 106 percent increase to be exact. This is not a surprise, given the significant rise in prices recently.
  • Interest in inflation throughout the supply chain also led to a 60-percent increase in page views for Producer Price Indexes data.
  • BLS has been collecting data on Work Stoppages (strikes and lockouts) for many years, but interest in these data grew in 2021, perhaps because of several high-profile stoppages. There was a 25-percent increase in page views for these data.
  • Rounding out the top five was an 18-percent increase in page views for Job Openings and Labor Turnover Survey data. With record numbers of job openings and heightened interest in churn in the labor force, these data have garnered much attention recently. We also began publishing a news release on state data in 2021 to meet the growing need for geographic information on job openings and labor turnover.

Turning to analytical data, some of the most viewed pages were those focusing on fast growing industries, inflation at both the consumer and producer level, and the impact of COVID-19 on many aspects of the economy, such as unemployment and food prices. But viewers were also attracted to some unique topics:

  • The most read Commissioner’s Corner blog was about the 17-year cycle of cicadas, with a look at economic trends during past cicada invasions.
A cicada
A group of friends and family watching a football game on TV

We welcome our 29 million website visitors and encourage you to check back regularly. Your interests drive our commitment to provide timely research on relevant topics. There’s new content every business day, so you never know what new research may be right around the corner in 2022. It will all be at www.bls.gov. See you there!

BLS website homepage in 2022
BLS website homepage in 2022

BLS Data in More Than a Century of Pictures

BLS was established in 1884, and some of our programs date back nearly that far. We have more than a century of statistics on prices, employment, wages, productivity, and more. But even in those early days, we realized that pages full of numbers can be a little dull. We frequently use pictures to tell the stories behind those numbers and help readers see the important points more quickly. Let’s look at over a century of BLS price statistics, in five charts.

The first chart, which looks hand drawn, was originally presented as part of the Department of Labor’s exhibit at the Century of Progress International Exposition in Chicago in 1933, also known as the Chicago World’s Fair.

Poster for Century of Progress International Exposition in Chicago in 1933

The chart below depicts changes in the cost of living from 1913 to 1932, based on the BLS Consumer Price Index. Here we see market baskets (with legs) rising during World War I, then declining and holding steady during the roaring 1920s, and declining as the nation entered the Great Depression.

Chart showing changes in cost of living from 1913 to 1932, based on the Consumer Price Index

Source: What Are Labor Statistics For? A Series of Pictorial Charts, Bulletin of the United States Bureau of Labor Statistics, No. 599, published in 1933.

The next chart, again looking hand drawn – this time perhaps with a ruler – compares wholesale prices (what we now call the Producer Price Index) in the years leading up to the United States entering World War I and World War II. It comes from the first of two BLS bulletins on Wartime Prices. The increase in the wholesale price for all commodities was nearly twice as great in the earlier period, reflecting large differences in the price change for such commodities as fuel and chemicals.

Chart showing percent changes in wholesale prices for commodities in World War 1 and World War 2

Source: Wartime Prices, Bulletin of the United States Bureau of Labor Statistics, No. 749, published in 1944.

Now, let’s move forward about 20 years. BLS published a chart book in 1963 focusing on price changes over the prior decade. The chart book presented both consumer and wholesale prices for the nation, along with consumer price trends in the 12 largest U.S. cities. The chart shown here, perhaps produced on an early computer, tracks the change in prices for all consumer items, and separately for various categories. Prices for durable commodities, such as appliances and furniture, declined in the early part of the period and later rebounded, resulting in virtually no price change over the decade. In contrast, the price of services, such as shelter, transportation, and medical care, rose steadily throughout the period.

Chart showing changes in consumer prices, 1953 to 1962

Source: Prices: A Chartbook, 1953–62, Bulletin of the United States Bureau of Labor Statistics, No. 1351, published in 1963.

With advances in computer software, BLS expanded the use of charts to allow readers to visualize data trends. Such charts became prominent in the BLS flagship publication, the Monthly Labor Review. In an article from 1987, data from the BLS International Price Program track price changes for selected imports.

Chart showing changes in U.S. Import Price Indexes for machinery and transportation equipment and intermediate manufactures, 1982 to 1986

Source: “Import price declines in 1986 reflected reduced oil prices,” Monthly Labor Review, April 1987.

BLS ushered in the age of interactive charts in recent years, making chart packages available with most news releases. In the chart below, readers can track a decade of consumer price changes for all items, and then click on selected categories to compare trends. Want to compare price changes for food at home with food away from home? It’s just a couple of clicks away.

Chart showing 12-month changes in the Consumer Price Index, August 2001 to August 2021

Source: Charts related to the Consumer Price Index news release.

Our charts today are a lot more sophisticated than the hand-drawn charts of the early twentieth century. They may not have amusing cartoon characters like the CPI market basket with legs, but they have interactive features that let you dig into more details about the data or choose the data you want to see. We also have several publications that focus on the visual display of data. Check out The Economics Daily and Spotlight on Statistics!

A Look at the Price of Construction

Whether I’m working from my home “office” or I travel into my “real” office, I notice a lot of construction activity. In my neighborhood, the number of work trucks seems to multiply every day, with homeowners getting new roofs, updated decks, expanded kitchens, and even large additions. Away from the neighborhood, I pass cranes high above me that are the makings of new residences, new office buildings, new schools, and more. Given all this construction, I thought I’d take a look at what BLS data have to say about construction prices.

I am going to focus on the Producer Price Index (PPI) for “intermediate demand.” You might already be familiar with the PPI, which was first published in 1902. The PPI measures the average change over time in the selling prices domestic producers receive for their output. The headline number reports on “final demand.” That is the average change in selling prices received by producers for products sold for personal consumption, capital investment, government, and export. But what about goods and services sold to businesses for further production, such as those used in construction projects? That’s where the “intermediate demand” index comes in.

Within the intermediate demand categories, the PPI provides price changes for both services and goods. Goods used for construction include “materials” and “components.” Materials are partially processed products that will be further processed into completed products. Softwood lumber and plywood are examples of materials.

Components are complete commodities purchased for assembly with other commodities. Sinks, windows, and doors are “components.” There are other inputs to construction as well, such as energy, transportation, and trade services, which fall into other PPI intermediate demand categories. But today the main focus is on materials and components we see every day at construction sites.

Your local roofing contractor and the mega-construction company building that new hospital are affected by the change in price for these intermediate demand goods. Those price changes probably are passed on to the final customer. So let’s look at what’s been happening to some of those intermediate demand prices.

Overall, the price of materials and components for construction registered a 1-month increase of 0.6 percent in July 2021 and a 20-percent increase from a year earlier. Here’s a chart showing a little longer history, separately for materials and components. The prices of both changed little during 2019 but surged upward later. Between the two, materials prices grew earlier, and by a larger amount, but fell back a bit in July 2021.

Percent change since December 2018 in producer prices for materials and components for construction

Editor’s note: Data for this chart are available in the table below.

The PPI measures price changes for many products. I chose a few, based on some local construction projects I’ve seen lately. For example, the neighbor down the street is putting a two-story addition onto the back of her house. A project like that probably requires a lot of wood products—and that might make it expensive. In the last 19 months, the prices received by producers of plywood more than doubled.

Along the nearby highway, there’s a large warehouse under construction, perhaps related to the increase in online shopping and home delivery. The owner may have seen price increases for many of the construction materials, including an 83-percent increase in the price of iron and steel in the past 19 months. The second chart shows that large price increases in wood and metal products dwarfed those observed for most other materials and components for construction.

It’s time for a new roof at my house—and I see companies producing the asphalt products used on roofs charged 12 percent higher prices in July 2021 than 19 months earlier. From my window, I can see one neighbor is replacing an aging heating and air conditioning unit, while another is installing a new patio. Their contractors are experiencing a variety of price changes. In the past 19 months, producer prices rose 11 percent for heating equipment and 7 percent for concrete products. Finally, with a lot of people spending the last year or more working and schooling from home, it may be time to spruce up that interior. Some of the materials your contractor may need include cabinets, windows, doors, and other “millwork,” whose prices over the last 19 months are up 25 percent; paint products, up 10 percent; lighting fixtures, up 6 percent; and sinks and other plumbing fixtures, up 4 percent.

Unusually large and fast price increases sometimes turn out to be temporary. Fuel prices often are volatile like this. Recently, consruction materials prices might have been as well. In July 2021, producer prices for softwood lumber fell 29 percent.

Percent changes in producer prices for selected materials and components for construction

Editor’s note: Data for this chart are available in the table below.

BLS measures changes in producer prices for items like these each month. The PPI moves differently for final demand and intermediate demand because the mix of goods and services consumed by these users differs. Likewise, even within the construction sector, the mix of inputs used for production varies. For example, construction of single-family homes might require more lumber, while construction of warehouses might require more steel.

We just looked at the producer price indexes that examine “intermediate demand” for detailed materials and components used in construction overall. Additional breakdowns of price changes for products used in construction and other industries are available from a different set of producer price indexes, known as the “inputs to industry” indexes. These two sets of indexes rely on somewhat different data and methods to track different producers’ use of inputs, so their estimates of overall producer price changes sometimes differ slightly. Together they offer a fuller picture. The inputs-to-industry indexes offer a more detailed breakdown of price changes for inputs consumed by specific construction industries.

Consider the overall producer prices paid for goods (excluding food and energy) used as inputs to different types of construction. The third chart shows that these prices rose most for construction of new single-family homes. This might partly reflect more intensive use of softwood lumber in construction of new single family homes than in some other types of construction.

Percent change since December 2018 in producer prices for goods (excluding food and energy) used as inputs to selected types of construction

Editor’s note: Data for this chart are available in the table below.

The price changes examined here just scratch the surface of the detail available from the PPI each month. As you think about your next homeowner project or pass by another large construction site, you now know where you can find that latest information on selling prices for intermediate demand. These data let you know how much contractors’ input prices change for the materials they need for the projects in your homes and neighborhoods.

Percent change since December 2018 in producer prices for materials and components for construction
MonthMaterialsComponents

Dec 2018

0.0%0.0%

Jan 2019

0.20.6

Feb 2019

0.60.7

Mar 2019

0.50.7

Apr 2019

0.80.9

May 2019

0.90.7

Jun 2019

0.60.6

Jul 2019

0.71.3

Aug 2019

0.60.7

Sep 2019

0.60.6

Oct 2019

0.40.5

Nov 2019

0.50.4

Dec 2019

0.40.5

Jan 2020

1.30.7

Feb 2020

1.90.7

Mar 2020

2.51.3

Apr 2020

1.31.2

May 2020

1.41.1

Jun 2020

2.31.1

Jul 2020

3.61.2

Aug 2020

6.31.5

Sep 2020

9.72.0

Oct 2020

8.82.3

Nov 2020

7.22.7

Dec 2020

8.43.3

Jan 2021

12.44.2

Feb 2021

14.46.0

Mar 2021

17.08.6

Apr 2021

18.710.9

May 2021

24.714.0

Jun 2021

27.718.3

Jul 2021

25.621.1
Percent changes in producer prices for selected materials and components for construction
Material or componentDecember 2019 to December 2020January 2021 to July 2021

Plywood

30.7%107.2%

Iron and steel

11.372.1

Softwood lumber

54.323.9

Hardwood lumber

9.235.5

Nonferrous metals

13.019.6

Fabricated structural metal products

2.027.1

Millwork

8.416.5

Asphalt felts and coatings

2.19.6

Heating equipment

0.610.4

Paints and allied products

1.68.3

Hardware

1.48.1

Concrete products

2.24.9

Lighting fixtures

1.24.6

Major household appliances

3.91.8

Plumbing fixtures and fittings

1.92.4

Floor coverings

0.42.6
Percent change since December 2018 in producer prices for goods (excluding food and energy) used as inputs to selected types of construction
MonthAll new constructionResidential new constructionSingle family new constructionAll maintenance/repairResidential maintenance/repair

Dec 2018

0.0%0.0%0.0%0.0%0.0%

Jan 2019

0.50.50.50.50.2

Feb 2019

0.70.70.80.70.6

Mar 2019

0.50.60.70.60.3

Apr 2019

0.80.70.70.90.9

May 2019

0.70.70.70.80.9

Jun 2019

0.60.60.60.60.5

Jul 2019

1.10.90.80.90.4

Aug 2019

0.50.60.50.60.4

Sep 2019

0.50.60.50.60.2

Oct 2019

0.30.40.40.50.2

Nov 2019

0.30.30.30.60.0

Dec 2019

0.30.30.40.60.1

Jan 2020

0.91.01.01.30.6

Feb 2020

1.31.61.61.71.0

Mar 2020

1.82.02.22.11.4

Apr 2020

1.31.31.31.41.0

May 2020

1.31.31.41.20.6

Jun 2020

1.61.72.01.81.3

Jul 2020

2.22.43.02.52.0

Aug 2020

3.53.95.13.93.2

Sep 2020

5.15.87.65.54.4

Oct 2020

4.85.57.25.24.4

Nov 2020

4.34.96.24.84.4

Dec 2020

5.15.67.05.54.6

Jan 2021

7.68.19.78.07.0

Feb 2021

9.510.111.79.78.7

Mar 2021

12.312.514.312.010.7

Apr 2021

13.814.015.913.512.0

May 2021

18.618.120.217.415.5

Jun 2021

22.521.724.020.218.4

Jul 2021

22.821.924.020.319.4

Reflecting on Our Recent Price Data User Conference

I have repeatedly seen during my time as Commissioner of Labor Statistics how driven and conscientious BLS employees are. This is especially true of how they relate to our customers.

At the core of our agency’s mission is a responsibility to our customers. BLS strives to meet the needs of a diverse set of customers for accurate, objective, relevant, timely, and accessible information. At the same time, we need to keep pace with a rapidly changing economy. Our data must reflect world events, such as the COVID-19 pandemic.

How do we meet this responsibility to our customers and keep them informed? How do we stay informed about what our customers face and what they need? For years, BLS Regional Offices have sponsored data user conferences to address these questions. These conferences have always been successful forums with broad representation from our data users.

I have participated in many such conferences virtually and in person. I recently had the pleasure of a different kind of virtual BLS data user conference, the price index users conference.

How did it come about? The staff of our Office of Prices and Living Conditions saw the success of our regional events and wanted to interact directly with our customers. What better way to communicate with price index users and get their feedback!

Especially now, with so much attention focused on inflation, customers want to know the pandemic’s effects on not only our survey results, but also on our survey methods, participation, and data quality.

This conference featured presentations by program experts from the Consumer Price Index, Producer Price Index, and U.S. Import and Export Price Indexes. There was plenty of technical detail that researchers, financial journalists, finance professionals, and other participants welcomed. The conference covered alternative data collection methods, medical care, quality adjustment, the impact of COVID-19, and other topics.

Beyond the technical detail, this event featured a listening session. This session went beyond the usual questions and answers to provide a forum for a robust exchange between our sophisticated data users and our experts. Everyone was in the same “room” and could participate in this discussion about methods, customer needs, COVID-19 effects, and future plans.

We at BLS benefit from this type of open exchange, and we thank all who attended for enhancing the 2-day event. We also owe a big thank you to all of our respondents for their survey participation throughout a very challenging time. When you agree to share your company’s information with BLS, you help ensure that we can continue to provide quality data. Survey participants are our bedrock, the foundation for good information about our economy. We cannot succeed in our mission for the American people, let alone our customers, without your help.

We look forward to your participation at our next event!