Producer Price Index: The U.S. Bureau of Labor Statistics’ Producer Price Index (PPI) for final demand grew 0.2% in December 2021 (seasonally adjusted), following the 1.0% increase in November. The index for final demand services grew 0.5% (its twelfth consecutive advance) while the index for final demand goods moved down by 0.4%. A major factor in the December decrease in prices for final demand goods was the index for gasoline, which moved down 6.1%.

Figure 1 shows the PPI for materials and components of construction, with the three-month moving average (3MMA) on the left-hand axis and monthly percent change of the 3MMA on the right. December’s 3MMA was 317.41, representing a change of +1.56% month over month (m/m). The 3MMA is steadily rising again after stalling around September.

Figure 2 shows the PPI for materials and components of manufacturing, with the 3MMA on the left-hand axis and monthly percent change of the 3MMA on the right. December’s 3MMA was 236.15, representing a change of +1.05% m/m. Like construction, the 3MMA for manufacturing is steadily rising.

At Gerdau, we monitor the PPI – issued monthly by the U.S. Bureau of Labor Statistics – because it is an unbiased, reliable measure of inflation. The PPI can better inform business decisions by providing a framework for contract adjustment, forecasting, inventory valuation, and as an overall economic indicator.