1

Current Price Topics

The 2012 PPI Weight Update: 

How and why does BLS 

update revenue weights?

Producer Price Index: Fourth Quarter 2011

U.S. Bureau of Labor Statistics February 2012 Volume 2, Number 14

With the release of January 2012 Producer 

Price Index (PPI) data by the Bureau of Labor 

Statistics (BLS) in February 2012, the PPI will 

begin using 2007 value-of-shipments (VOS) 

data as the weight basis for the PPI. (The PPI 

had used 2002 shipment data as the basis for 

its index weights from 2007 through 2011.)

The PPI is a family of indexes that represents 

the marketed output of domestic industries. 

Representation is based primarily on VOS 

data from the U.S. Census Bureau’s Economic 

Census (which includes the census of 

manufacturers, services, and mining) and 

the Census of Agriculture conducted by 

the U.S. Department of Agriculture (USDA). 

These censuses occur every 5 years (in years 

that end with a 2 or 7) and provide a broad 

measure of business activity across the U.S. 

economy. As the data reflect important 

technological advancements and changes 

in demand, BLS updates the value weights 

used to calculate Producer Price Indexes 

every 5 years to reflect recent production 

and marketing patterns. Using the updated 

census data, PPI weights are revised to reflect 

the 2007 marketed output of production. 

Even though the basic structure of the 

commodity and industry indexes does not 

change, aggregate indexes are impacted in 

a manner reflective of the relative gains and 

losses in the value of shipments between the 

two weight reference periods. (Note that PPI 

weights also fluctuate each month, but to 

a lesser extent, due to pricing trends in the 

economy.1)

The industry and commodity structures in the 

PPI employ different VOS Census data for the 

weight revision. The PPI industry structure, 

classified according to the North American 

Industry Classification System (NAICS), uses 

Census made in industry value-of-shipments 

data. These data reflect the value of shipments 

from establishments classified within specific 

industries and are broken into primary 

products (products the establishments 

manufacture that are considered to be 

in their main line of business), secondary 

products (products the establishments 

manufacture that are classified as primary in 

another industry), and miscellaneous receipts 

(revenue not derived from product sales but 

from service activities classified as primary 

in other industries). PPI commodity weights 

are based on Census Wherever Made valueof-shipments data. These data are organized 

by product and document the value of 

shipments of a product regardless of the 

industry of its producer. Value-of-shipments 

data from the Census Bureau and the USDA 

are located on their respective websites.2

A review of the leading weight shifts between 

2002 and 2007 reveals that gains were made 

in petroleum-related NAICS industries: 
CURRENT PRICE TOPICS

2

petroleum refineries (NAICS 324110), crude 

petroleum and natural gas extraction (NAICS 

211111), petrochemical manufacturing 

(NAICS 325110), plastic material and resin 

manufacturing (NAICS 325211), support 

activities for oil and gas operations (NAICS 

213112), and drilling oil and gas wells (NAICS 

213111) and basic materials industries, 

such as iron and steel mills (NAICS 331111), 

construction machinery manufacturing 

(NAICS 333120), and ready-mix concrete 

manufacturing (NAICS 327320). Higher value 

of shipments in these economically sensitive 

industries were driven, in part, by economic 

growth, as gross domestic product (GDP) 

in the United States grew at a 2.7-percent 

average annual rate between 2002 and 

2007.3 Higher crude petroleum shipment 

values were chiefly a result of rising prices 

between the two weight reference periods: 

crude petroleum prices (measured per oil 

barrel, bbl) climbed from an average of $26/

bbl in 2002—following the 2001 recession 

and the 9/11 attacks—to $72/bbl in 2007.4

From 2002 to 2007 oil prices were driven by 

a 10-percent increase in global oil demand, 

due to strong worldwide economic growth, 

tight supply and inventories, and geopolitical 

tensions.5 Shipment values of basic materials 

and construction equipment also surged 

from 2002 to 2007, as the housing bubble, 

which peaked in 2007, created exceptional 

demand for construction-related products 

during this period.6

By contrast, weight declines were mainly 

in industries in the apparel manufacturing 

subsector (NAICS 315) and in electron tube 

manufacturing (NAICS 334411). Over the last 

decade, apparel companies have responded 

to competitive pressures by shifting 

production to less costly foreign operators in 

developing markets. As foreign production 

is not considered in scope, this shift has led 

to reductions of more than 50 percent in 

the value of shipments for many apparel 

industries.7

 Electron tube manufacturers have 

been affected adversely by the development 

of liquid crystal display (LCD), plasma, and 

other flat panel displays that are both lower in 

cost and superior in quality. The subsequent 

drop in demand for technologically obsolete 

cathode ray tubes has led to a significant 

decrease in shipments from electron tube 

manufacturers.8

The PPI for finished goods rose 4.8 percent in 

2011, compared with a 3.8-percent advance 

in 2010.9 This faster rate of increase was led 

by prices for finished goods less foods and 

energy, which moved up 3.0 percent in 2011, 

after inching up 1.4 percent a year earlier. In 

addition, prices for finished consumer foods

climbed 6.1 percent, following a 3.4-percent 

rise in 2010. In contrast, the index for finished 

energy goods advanced at a slower rate in 

2011 than in the prior year—8.4 percent—

Current Price Trends

Producer Price Index Price 

Highlights for 2011
CURRENT PRICE TRENDS

3

subsequent to a 6.3-percent gain in 2010, 

as the indexes for intermediate goods less 

foods and energy and for intermediate energy 

goods moved up at slower rates, while prices 

compared with 10.8 percent. (See chart 1.) 

At the earlier stages of processing, prices 

received by manufacturers of intermediate 

goods increased 6.1 percent in 2011, 

3.8 3.4

10.8

1.4

4.8

6.1

8.4

3.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Overall Food Energy Core

Percent change

Dec 2010 Dec 2011

SOURCE: U.S. Bureau of Labor Statistics

Chart 1. Twelve-month percent change in PPI for overall, food, energy, and 

core finished goods, not seasonally adjusted, December 2010–2011

6.3 6.1

12.6

4.7

6.1

8.3

11.8

4.1

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Overall Food Energy Core

Percent change

Dec 2010 Dec 2011

SOURCE: U.S. Bureau of Labor Statistics

Chart 2. Twelve-month percent change in PPI for overall, food, energy, and 

core intermediate goods, not seasonally adjusted, December 2010–2011 
CURRENT PRICE TRENDS

4

expansion in 2010 was replaced in 2011 by 

economic uncertainty. Weakening GDP growth 

in both the U.S. and Europe,11 lingering high 

unemployment in the U.S.,12 and the European 

financial crisis weakened pricing for many basic 

commodities. The index for core intermediate 

goods also rose less in 2011 than in 2010, 

as inflation slowed for less highly processed 

materials used for nondurable and durable

goods manufacturing. In contrast, prices for 

more highly processed manufacturing and 

construction components, as well as supplies

for business, climbed at higher rates, compared 

with a year earlier. Likewise, the finished core 

PPIs for both capital equipment and finished 

consumer goods less foods and energy moved 

up at quicker rates than in 2010.13

In the food sector, after surging in 2010 and 

continuing their rise in the first half of 2011, 

prices for grains and soybeans fell in the 

for intermediate foods and feeds rose more 

than in the preceding year. (See chart 2.) 

Crude goods inflation slowed to 6.4 percent, 

from 16.1 percent in the previous year, as the 

indexes for core10 crude goods, foodstuffs and 

feedstuffs, and energy goods all advanced less 

than a year earlier. (See chart 3.)

Economic background

From 2010 to 2011, within each PPI stage of 

processing, price movements for goods other 

than foods and energy accounted for the 

majority of the shift in producer inflation. After 

surging 27.6 percent in 2010, the index for 

core crude goods advanced at a much slower 

rate in the first half of 2011 and fell in the 

second half of the year. Smaller increases and 

outright declines in prices for ferrous scrap, 

nonferrous ore and scrap, and wastepaper led 

the deceleration in prices for core crude goods. 

Contributing to these changes in inflation, GDP 

16.1

18.5

7.9

27.6

6.4

12.2

2.2

3.5

0.0

4.0

8.0

12.0

16.0

20.0

24.0

28.0

32.0

Overall Food Energy Core

Percent change

Dec 2010 Dec 2011

SOURCE: U.S. Bureau of Labor Statistics

Chart 3. Twelve-month percent change in PPI for overall, food, energy, and 

core crude goods, not seasonally adjusted, December 2010–2011
CURRENT PRICE TRENDS

5

latter half of the year. Expectations regarding 

yearend production and storage for corn, 

wheat, and soybeans improved steadily as the 

2011 harvest approached. In the corn sector, 

harvested acreage increased 3.1 percent 

to nearly 84 million acres, while yield per 

acre decreased 3.7 percent to 147.2 bushels 

per acre, resulting in a 0.7-percent decline 

in total corn production to 12.36 billion 

bushels.14 In the wheat market, a smaller U.S. 

harvest in 2011—harvested acreage fell 4.0 

percent, yield per acre shrank 5.6 percent, 

and total production dropped 9.4 percent—

was outweighed by increased production 

around the globe,15 as the wheat harvests 

in Kazakhstan and Brazil were particularly 

successful.16 The market for soybeans mirrored 

the wheat market: in the United States, 

harvested acreage, yield per acre, and total 

production also moved down, while Brazilian 

production remained ample.17 Price advances 

for prepared animal feeds and slaughter cattle

also moderated in 2011; however, prices for 

more highly processed foods—such as cheese 

products, processed fruits and vegetables, 

beef, chicken, and bakery products—did not 

respond to easing price pressure at earlier 

production stages.

In the energy sector, the rate of increase in 

crude petroleum prices slowed to 14.8 percent 

in 2011 from 24.8 percent a year earlier. Prices 

for refined petroleum products rose at a 

slightly slower rate than in 2010. Domestic 

crude oil production advanced 2.7 percent in 

2011 to an average of 5.6 million barrels per 

day, while average daily net imports fell 2.7 

percent to 8.8 million barrels. After adjustments 

and changes to stockpiles, average crude 

oil inputs to refineries edged up 0.6 percent 

to 14.7 million barrels per day in 2011.18

For finished motor gasoline, average daily 

production moved down 1.9 percent to 8.9 

million barrels.19 In 2011, the United States was 

a net exporter of refined petroleum products.20

In the natural gas sector, underground storage 

of wellhead natural gas ended the year at 3,472 

billion cubic feet; an increase of 375 billion 

cubic feet from the end of the previous year 

and 458 billion cubic feet above its 5-year 

average.21 The PPI for wellhead natural gas fell 

19.3 percent in 2011, after declining 9.4 percent 

in the preceding year. Utility natural gas prices 

moved down 5.3 percent, after inching up 0.2 

percent in 2010.

Finished goods

Leading the 2011 acceleration in the finished 

goods index, prices for finished goods less 

foods and energy climbed 3.0 percent, after 

edging up 1.4 percent in 2010. Nearly half 

of this faster rate of advance can be traced 

to prices for motor vehicles. The index for 

light motor trucks moved up 3.2 percent in 

2011, after inching down 0.3 percent in the 

previous year, and the index for passenger cars

increased 2.5 percent, after falling 2.3 percent 

in 2010. Prices for commercial furniture also 

advanced in 2011, following declines in the 

preceding year. The index for apparel and other 

fabricated textile products rose more than in 

2010. Conversely, cigarette prices climbed 4.9 

percent in 2011, compared with a 7.9-percent 
CURRENT PRICE TRENDS

6

gain in the prior year. The pharmaceutical 

preparations index also increased less than a 

year earlier.

Similar to the finished core index, prices for 

finished consumer foods rose more in 2011 

than a year earlier, 6.1 percent, compared 

with 3.4 percent. The index for processed 

fruits and vegetables climbed 8.0 percent, 

following a 0.7-percent decline in 2010. Prices 

for natural, processed, and imitation cheese

and for peanut butter also turned up in 2011. 

The index for bakery products increased more 

than in the preceding year. In contrast, prices 

for melons dropped 64.2 percent, following 

a 199.1-percent surge in 2010, while the pork

index advanced significantly less in 2011 than 

in the previous year.

Prices for finished energy goods rose 8.4 

percent in 2011, following a 10.8-percent 

increase in 2010. About three-fourths of this 

deceleration is attributable to the gasoline

index, which advanced 13.1 percent, after 

climbing 18.5 percent a year earlier. Prices 

for diesel fuel and home heating oil also 

moved up less in 2011 than in the prior year. 

The index for residential natural gas fell more 

than in 2010. Conversely, prices for liquefied 

petroleum gas and finished lubricants

increased more in 2011 than a year earlier. 

Intermediate goods

The Producer Price Index for intermediate 

materials for further processing rose 6.1 

percent in 2011, following a 6.3-percent 

advance in 2010. This broad-based increase 

was driven by higher prices for intermediate 

materials less foods and energy and for 

intermediate energy materials.  An advance in 

the index for intermediate foods and feeds also 

contributed, but to a lesser extent, to the rise in 

intermediate goods prices.

Prices for intermediate materials less foods 

and energy increased 4.1 percent in 2011, after 

rising 4.7 percent in 2010. The index for primary 

basic organic chemicals moved up 6.1 percent, 

following an 18.7-percent jump in the previous 

year. Prices for paperboard, nonferrous mill 

shapes, primary nonferrous metals, nonferrous 

wire and cable, and paper boxes and 

containers declined in 2011, following gains a 

year earlier. The index for inedible fats and oils

rose less than in 2010. Conversely, the index for 

hot rolled steel sheet and strip climbed 14.4 

percent in 2011, compared with a 2.5-percent 

advance in the previous year. 

The index for intermediate energy materials

moved up 11.8 percent in 2011, subsequent 

to a 12.6-percent gain a year earlier. In 2011, 

higher prices for gasoline, diesel fuel, jet fuel, 

and asphalt outweighed lower prices for utility 

natural gas.

Prices for intermediate foods and feeds

climbed 8.3 percent in 2011, subsequent to 

a 6.1-percent gain a year earlier. Leading this 

acceleration, the index for natural, processed, 

and imitation cheese jumped 17.8 percent, 

following a 1.4-percent decrease in 2010. Prices 

for confectionery materials and for processed 

fruits and vegetables also turned up in 2011. In 

contrast, the rate of increase in prices for pork 

products slowed to 7.1 percent, compared with 
CURRENT PRICE TRENDS

7

In contrast, the fluid milk index jumped 18.6 

percent, subsequent to a 1.0-percent advance a 

year earlier. Prices for alfalfa hay also rose more 

than they had in 2010.

Crude energy goods prices moved up 2.2 

percent in 2011, following a 7.9-percent 

increase a year earlier. The index for crude 

petroleum accounted for over 60 percent of 

this deceleration, advancing 14.8 percent, after 

a 24.8-percent climb in 2010. Natural gas prices 

declined more than they had in the previous 

year. Conversely, the coal index rose 9.0 

percent in 2011, subsequent to a 4.6-percent 

advance in 2010.

Trade industries

In 2011, the increase in the Producer Price 

Index for the net output of total trade 

industries accelerated to 3.4 percent, from 

1.3 percent in 2010. (Trade indexes measure 

changes in margins received by wholesalers 

and retailers.) Leading this faster rate of 

advance, the margin index for gasoline stations

jumped 17.0 percent, after dropping 17.7 

percent in 2010. Margins received by merchant 

wholesalers of durable goods also turned up 

in 2011. The margin index for non-discount 

department stores declined less than it had in 

the previous year. In contrast, margins received 

by merchant wholesalers of nondurable goods

advanced at a slower rate, climbing 0.6 percent, 

subsequent to a 3.6-percent increase in 2010. 

The index for discount department stores also 

rose less in 2011, and margins received by 

warehouses and supercenters turned down, 

a 22.2-percent surge a year earlier. The indexes 

for prepared animal feeds and flour also 

increased less than they had in 2010.

Crude goods

The Producer Price Index for crude materials 

for further processing advanced 6.4 percent in 

2011, compared with a 16.1-percent increase in 

the previous year. This deceleration was broad 

based, with prices for crude nonfood materials 

less energy, crude foodstuffs and feedstuffs, 

and crude energy goods all rising less than 

they had in 2010.

In 2011, the index for crude nonfood materials 

less energy moved up 3.5 percent, following 

a 27.6-percent jump a year earlier. Iron and 

steel scrap prices advanced 11.1 percent, after 

climbing 38.9 percent in 2010. Slower rates of 

increase in the indexes for nonferrous metal 

ores, corn, hides and skins, and raw cotton

also were significant factors in the crude core 

deceleration. Prices for wastepaper, nonferrous 

scrap, and wheat turned down in 2011, after 

rising in the prior year. In contrast, the index for 

iron ores jumped 20.5 percent, subsequent to a 

3.8-percent rise in 2010. 

The index for crude foodstuffs and feedstuffs

increased 12.2 percent in 2011, compared with 

an 18.5-percent climb in the previous year. 

Corn prices accounted for nearly eighty percent 

of this deceleration, moving up 7.4 percent 

after advancing 53.3 percent in 2010. The index 

for slaughter cattle also increased less in 2011 

than it had in the prior year. Prices for soybeans

and wheat turned down, after rising in 2010. 
CURRENT PRICE TRENDS

8

37.9-percent jump in 2010. Prices received by the 

industry for deep sea freight transportation also 

turned down, after advancing in the prior year.

Traditional service industries

In 2011, the Producer Price Index for the net 

output of total traditional service industries

climbed 1.9 percent; the same rate as it had 

in 2010. In 2011, increases in the indexes 

for insurance carriers and related activities, 

general medical and surgical hospitals, 

commercial banking, offices of lawyers, 

offices of physicians, and engineering services

outweighed lower prices received by the 

passenger car rental industry.

after rising in 2010.

Transportation and warehousing industries

The Producer Price Index for the net output 

of transportation and warehousing industries

accelerated to 6.1 percent, from 4.1 percent 

in 2010. Prices received by the scheduled 

passenger air transportation industry group 

led this faster rate of increase, climbing 9.7 

percent compared with a 3.1-percent rise a 

year earlier. The industry indexes for line-haul 

railroads, general freight trucking, and couriers

also advanced more than they had in 2010. 

Conversely, the index for pipeline transportation 

of crude oil fell 4.4 percent, subsequent to a 

Notes

1Chapter 14, Producer Prices, BLS Handbook of Methods, (U.S. Bureau of Labor Statistics), pp. 6-7, http://www.bls.gov/opub/

hom/pdf/homch14.pdf.

2 See 2007 Economic Census, (U.S. Census Bureau), http://www.census.gov/econ/census07/. Also, see 2007 Census Report, 

volume 1 (U. S. Department of Agriculture), http://www.agcensus.usda.gov/Publications/2007/Full_Report/index.asp.

3 National Income and Product Accounts Tables (U.S. Bureau of Economic Analysis), http://www.bea.gov/iTable/iTable.

cfm?ReqID=9&step=1.

4 Spot Prices for Crude Oil and Petroleum Products, Table 1.1.1, Annual data (U.S. Energy Information Administration), http://

www.eia.gov/dnav/pet/pet_pri_spt_s1_a.htm.

5 International Petroleum (Oil) Consumption, Table 1.7 (U.S. Energy Information Administration), http://www.eia.gov/emeu/

international/oilconsumption.html. Short-Term Energy Outlook Supplement: “Why Are Oil Prices So High?” November 2007 

(U.S. Energy Information Administration), http://www.eia.gov/forecasts/steo/special/pdf/2007-oil-prices.pdf.

6Median and Average Sales Prices of New Homes Sold in United States (U.S. Census Bureau), (http://www.census.gov/const/

uspriceann.pdf).

7Economic Classification Policy Committee (ECPC) Recommendation for Manufacturing Industry Reductions in North American 

Industry Classification System (NAICS) Revisions for 2012 (U.S. Census Bureau), pp. 8-10, http://www.census.gov/eos/www/

naics/fr2010/Manufacturing_Industry_Reductions.pdf.

8 Ibid, p.31, http://www.census.gov/eos/www/naics/fr2010/Manufacturing_Industry_Reductions.pdf. 

9 Price movements for PPIs described in this article include preliminary data for the months of September 2011 through December 

2011, which were calculated under the 2002 weight basis. All PPI data are recalculated 4 months after original publication, to reflect 

late data received from survey respondents. In addition, seasonally adjusted PPIs are recalculated on an annual basis for 5 years, to 

reflect more recent seasonal patterns. Most of the price movements described in this section are not-seasonally adjusted 12-percent 

changes.

10Within the PPI stage-of-processing structure, indexes for goods other than foods and energy commonly are referred to as the core 

indexes.
CURRENT PRICE TRENDS

9

11 Gross Domestic Product: Third Quarter 2011 (Third Estimate), BEA 11–63, Bureau of Economic Analysis, December 22, 2011, 

at http://www.bea.gov/newsreleases/national/gdp/2011/pdf/gdp3q11_3rd.pdf, p. 6. After rising 3.0 percent in 2010, in the first 

three quarters of 2011, GDP advanced at annualized rates of 0.4, 1.3, and 1.8 percent. Data for the final quarter of 2011 were posted 

Jan. 27, 2012, too late to be included in this review. The Eurostat homepage is located at http://epp.eurostat.ec.europa.eu/portal/

page/portal/eurostat/home. A link in the left-hand sidebar labeled “Real GDP growth rate,” http://epp.eurostat.ec.europa.eu/

tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tsieb020 takes the user to a table of GDP figures.

12 The Employment Situation – December 2011, USDL-12-0012 (U.S. Bureau of Labor Statistics, January 6, 2012), at http://www.

bls.gov/news.release/archives/empsit_01062012.pdf, chart 1, p. 1. 

13More highly processed intermediate and finished goods commonly exhibit price movements that are somewhat different from 

price movements for less-processed goods, because basic material costs tend to be a smaller portion of total costs for producers of 

more highly processed goods than for manufacturers of less-processed goods. Contracts and escalation agreements also can delay or 

mitigate the pass-through effect of early-stage price volatility at successive stages of processing.

14Crop Production, 2011 Summary, ISSN: 10577823, Jan. 12, 2012, U. S. Department of Agriculture, National Agricultural Statistics 

Service, pp. 8-9, at http://usda01.library.cornell.edu/usda/nass/CropProdSu//2010s/2012/CropProdSu-01-12-2012.pdf.

15 Ibid, pp. 18-19.

16 Wheat Outlook, WHS-12a, Jan. 17, 2012, U. S. Department of Agriculture, Economic Research Service, p. 5, at http://usda01.

library.cornell.edu/usda/ers/WHS//2010s/2012/WHS-01-17-2012.pdf.

17Crop Production, 2011 Summary, ISSN: 10577823, Jan. 12, 2012, U. S. Department of Agriculture, National Agricultural Statistics 

Service, pp. 42-43, at http://usda01.library.cornell.edu/usda/nass/CropProdSu//2010s/2012/CropProdSu-01-12-2012.pdf. 

Oil Crops Outlook, OCS-12a text, Jan. 13, 2012, U. S. Department of Agriculture, Economic Research Service, pp. 1-5, at http://

usda01.library.cornell.edu/usda/ers/OCS//2010s/2012/OCS-01-13-2012.pdf.

18 Weekly Petroleum Status Report, DOE/EIA-0208(2011-52), Jan. 5, 2012, U. S. Department of Energy, Energy Information 

Administration, p. 1, at http://www.eia.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/

historical/2012/2012_01_05/pdf/wpsrall.pdf.

19 Ibid, p. 1.

20 Ibid, p. 13.

21 Weekly Natural Gas Stage Report, U. S. Department of Energy, Energy Information Administration, web-based release, updated 

weekly, at http://ir.eia.gov/ngs/ngs.html.