Analyzing price movements within the Producer Price Index Final Demand–Intermediate Demand aggregation system

Brian Hergt, Joseph Kowal, Jonathan Weinhagen
2014 Monthly labor review  
Since the late 1970s, the Producer Price Index (PPI) has employed the Stage of Processing (SOP) system as its main publication structure. The SOP system is composed of price indexes for goods (1) sold to households, (2) as capital investment, and (3) as business inputs. The Final Demand-Intermediate Demand (FD-ID) aggregation system was introduced on an experimental basis in January 2011 and will become the PPI's main publication structure in early 2014. The FD-ID aggregation system includes
more » ... ce indexes for goods, services, and nonresidential construction sold to final demand (households, government, exports, and capital investment) and to intermediate demand (business inputs). This article presents and analyzes limited historical data on the basis of the FD-ID system. As background to this analysis, the article reviews economic and commodity price trends from November 2009 through June 2012, the period for which the new aggregate data are investigated. The article then analyzes historical price movements for the final-demand indexes and the intermediate-demand-by-commodity-type portion of the system, provides a description of the intermediate-demand-by-production flow treatment, and examines price transmission within the production flow portion of the system.
doi:10.21916/mlr.2014.3 fatcat:7kwpzt4efbgp5p7ul3a7p6cjhm