Producer price index falls slightly for second consecutive month

Sept. 14 (UPI) -- The producer price index dropped for the second month in a row, falling a seasonally adjusted 0.1% in August after tumbling 0.4% the month before, according to the latest report issued by the Labor Department on Wednesday.

The index, the indicates the prices producers receive for goods and services, matched what Dow Jones economists expected for the month.

The index minus the more volatile food, energy and trade services, increased 0.2% in August. On an unadjusted annual basis, the index rose 8.7% over the same time last year, down from 9.8% in July and 11.3% in June, according to the report.

"In August, the decrease in the index for final demand is attributable to a 1.2% decline in prices for final demand goods," the Labor Department said. "In contrast, the index for final demand services advanced 0.4%."

The final demand goods decrease was sparked by a 6% decrease in prices for final demand energy. Gasoline prices, which drove producer price increases earlier in the year, tumbled 12.7% in August.

"Prices for diesel fuel, jet fuel, chicken eggs, primary basic organic chemicals, and home heating oil also declined," the Labor Department said. "In contrast, the index for construction machinery and equipment increased 2.6%. Prices for beverages and beverage materials and for electric power also rose."

The final demand services index increased 0.4% in August, marking the fourth consecutive month of increases.

"Sixty percent of the August advance can be traced to a 0.8% increase in margins for final demand trade services," the department said. "Trade indexes measure changes in margins received by wholesalers and retailers.

"Prices for final demand services less trade, transportation and warehousing also moved higher, rising 0.3%. Conversely, the index for final demand transportation and warehousing services decreased 0.2%."