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Producer Prices Rise 9.7% for 2021, the Most in Series History

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21 comments on Producer Prices Rise 9.7% for 2021, the Most in Series History

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The BLS Producer Price Report for December 2021 shows the strongest price increases since the series began in 2010. 

Key Points

  • The Producer Price Index for final demand increased 0.2 percent in December. This rise followed advances of 1.0 percent in November and 0.6 percent in October.
  • On an unadjusted basis, final demand prices moved up 9.7 percent in 2021, the largest calendar-year increase since data were first calculated in 2010.
  • In December, the advance in the final demand index can be traced to a 0.5-percent increase in prices for final demand services.
  • Conversely, the index for final demand goods decreased 0.4 percent.
  • Prices for final demand less foods, energy, and trade services rose 0.4 percent in December following a 0.8-percent increase in November.
  • In 2021, the index for final demand less foods, energy, and trade services moved up 6.9 percent, following a 1.3-percent advance in 2020.

PPI Final Demand vs CPI 

Final Demand Services

  • Prices for final demand services rose 0.5 percent in December following a 0.9- percent increase in November. 
  • Over half of the broad-based advance in December is attributable to margins for final demand trade services, which moved up 0.8 percent.
  • Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services rose 0.2 percent and 1.7 percent, respectively. 
  • Over a quarter of the December increase in the index for final demand services can be attributed to margins for fuels and lubricants retailing, which rose 13.0 percent. T
  • Margins for automobile and automobile parts retailing decreased 2.7 percent. 

Final Demand Goods

  • The index for final demand goods moved down 0.4 percent in December, the first decrease since falling 2.8 percent in April 2020.
  • Leading the December decline, prices for final demand energy dropped 3.3 percent. 
  • The index for final demand foods fell 0.6 percent. 
  • Prices for final demand goods less foods and energy advanced 0.5 percent. 
  • A major factor in the December decrease in prices for final demand goods was the index for gasoline, which moved down 6.1 percent. 
  • Prices for meats, gas fuels, fresh and dry vegetables, diesel fuel, and primary basic organic chemicals also declined. In contrast, the index for ethanol increased 6.4 percent. 
  • Prices for residential electric power and for chicken eggs also moved higher.  

Three Related Articles

  1. Real and Unreal Inflation: Workers Lost Money 9 out of 12 Months in 2021
  2. Inflation is Up 7% in December Reaches Fastest Pace Since 1982
  3. Homeownership Dreams of Zoomers and Millennials Shattered by Prices

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Mike Shedlock

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21 Comments
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Tony Bennett
Tony Bennett
4 years ago
Well, well, well … look what we got this morning.  Negatives across the board.  BIG misses by the “experts” … and, uh, many here.
Industrial Production — expected +0.3% … actual -0.1%
Retail sales … expected 0.0% … actual -1.9%
Import prices … expected +0.3% … actual -0.2%
Export prices … expected +0.4% … actual -1.8%
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thimk
thimk
4 years ago
lively discussion , great contributions , however things don’t happen in a vacuum,  so why are prices increasing   ? Is china charging more for their products because  there is less of it ?  china is a monopoly . China controls the world’s supply chain .           
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KidHorn
KidHorn
4 years ago
Reply to  thimk
Two prong. One is stimulus payments put extra money in peoples pockets. We had big jumps in spending when the checks were mailed out. Some lingering for a few months. This caused widespread inflation.  The other is supply constraints. Which limited supply and had a big effect in certain sectors like autos and computer parts.
I think once stimulus has been exhausted and the employment to population ratio returns to trend. And sick people get back to work. Things will start to return to normal.
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StukiMoi
StukiMoi
4 years ago
Reply to  thimk
“China controls the world’s supply chain . “
Fat chance. They are hustling like crazy, trying to obtain all manners of, primarily raw material, inputs to feed their industrial processes.
Once they fully gel around that recognition, they’ll see that the main impediment to them obtaining more resources is, de facto, effectively that Americans, and Europeans, can still afford to buy and drive trucks and/or buy and heat large houses. Despite no longer producing much of value, in exchange for the oil and ore they consume.
Currently, at least parts of China still seems concerned about keeping the Dollar expensive enough to indirectly keep their own labor “cheap.” I.e., they are still mainly approaching trade in terms of “We produce, rich Westerners consume. We get their money. With which we can then buy advanced stuff which we cannot ourself produce.” That worked well, as long as The West actually did produce something valuable, which noone else could replicate…..
Now, The Chinese are instead being paid in monopoly money. By people producing, eh? frivolous lawsuits, mindless “declarations” and such things…..
So, being able to obtain more actual value, in the form of natural resources, is increasingly becoming the China’s focus. The West no longer has anything to offer in return for Chinese goods. So continuing to care about what Westerners can afford, is becoming an increasingly obvious folly.
Instead, the focus is on developing a domestic, or perhaps Asian, or even “Global South,” Market for Chinese manufacturing output. Doing so, benefits from Chinese industrials’ improved access to raw material inputs. And access to raw materials, benefits directly from others’, who provide no value in return for what they currently consume, being able to demand, hence consume less. IOW, it benefits from Americans facing higher prices.
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MPO45
MPO45
4 years ago
The deflationary collapse will come when boomer retirements reach critical mass.  I expect that to start in 2025 or 2026 and in 2030..BOOM then Mish and the doom and gloomers will finally get their deflationary collapse wish.  The question is how many of the boomers here will be alive to see it?
It won’t matter if red or blue is in charge because neither can conjure up 60 million people that left the labor force to retire on social security and medicare.
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KidHorn
KidHorn
4 years ago
Reply to  MPO45
I think we’ll see deflation in finished goods and inflation in services. Old people stop buying things but spend more on services.
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Stan888
Stan888
4 years ago
Folks, please calm down! Biden is President, everything will be ok. 🙂 
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RonJ
RonJ
4 years ago
“Producer Prices Rise 9.7% for 2021”
That’s just about as close as one can get to double digits. Powell had better start wearing his Whip Inflation Now button.
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Tony Bennett
Tony Bennett
4 years ago
Inflationistas … enjoy the last few click-clacks of coaster …
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Billy
Billy
4 years ago
I wonder if Biden is going to use Obama’s tactics and say he just needs 4 more years because he didn’t realize the economy was as bad from Trump as he expected. But don’t worry we will be able to give free things to everyone and it won’t cost a dime. 
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Jojo
Jojo
4 years ago
Biden’s ineffectual presidency is looking a lot like Carter’s.  Biden/Dems ares focused on voting rights (now that BBB seems dead) and last Jan 6th Capitol riot (aka “the insurrection”).  People vote their pocketbooks.  So sad for Dems…
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Jackula
Jackula
4 years ago
Reply to  Jojo
Yep, more and more looking like a late 70’s early 80’s redux.
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1-shot
1-shot
4 years ago
This doesn’t bode well for future CPI numbers, since retailers generally mark up their wholesale costs by 20 – 100% to the consumer
9.7% x 1.5 = a really ugly picture
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Jojo
Jojo
4 years ago
Reply to  1-shot
If it keeps up, there will be another large SS increase next year.
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TexasTim65
TexasTim65
4 years ago
The inflation train is no longer even close to just leaving the station now. Instead it’s picking up steam on a downward sloping track. There is plenty of evidence that even bigger numbers are coming in the next few months as fuel and transportation costs are rising quickly.
At 7-10% inflation, if you make a 100K a year, you lost 7-10K in salary value. To over come that you’ll need a 10-13% raise (to account for taxes) just to stand still.
In a few months time people are going to start to feel a LOT poorer, not just a little bit poorer.
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Tony Bennett
Tony Bennett
4 years ago
Reply to  TexasTim65
The coming recession will take care of inflation.
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Zardoz
Zardoz
4 years ago
Reply to  Tony Bennett
Recessions aren’t allowed anymore.
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TexasTim65
TexasTim65
4 years ago
Reply to  Tony Bennett
Only in discretionary items.
The non-discretionary items like food, clothing, housing, electric, fuel can’t really be scaled back much. There inflation can continue to rage for a long time eating up more and more discretionary income.
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Tony Bennett
Tony Bennett
4 years ago
Reply to  TexasTim65
Sure they can.
When demand falls – across the board – prices will fall across the board.
Not different THIS time.
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FromBrussels
FromBrussels
4 years ago
….I am supposed to write a first comment …..yet merely a fn song pops up in me fn mind…..my my my my Corona …so I better not right one write ?
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TCW
TCW
4 years ago
Reply to  FromBrussels
Sharona
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