An input-price average is useful only after asking what a business buys. In the November 15, 2022 producer release, the Bureau of Labor Statistics reported that October prices for unprocessed intermediate goods fell 11.7 percent, seasonally adjusted. Processed intermediate goods fell 0.2 percent. Services for intermediate demand instead rose 0.3 percent. [ppi2022]
The goods detail sharpens that contrast. Unprocessed energy materials fell 19.8 percent in October, while processed energy goods rose 1.7 percent, both seasonally adjusted. These are distinct product groupings, not consecutive readings of one commodity price. The report therefore offered no single energy-cost change that every business could apply to its purchasing budget. [ppi2022]
The services increase was the fourth consecutive monthly rise. BLS attributed more than half of October’s advance in intermediate services to a 6.0 percent increase in the business loans index, which had partial coverage. That is a change in a service-price index, not a six-percentage-point increase in every borrower’s interest rate. [ppi2022]
Our reading is that a buyer assessing room to negotiate should start with the relevant input category, not assume an aggregate decline guarantees savings. The November 10 consumer release measured prices paid by consumers, rather than the same intermediate purchases. Neither release supplied individual supplier offers or contract terms. This retrospective preserves the November 2022 figures and leaves actual bargaining outcomes unclaimed. [ppi2022][cpi2022]
Source documents
- Consumer Price Index, October 2022https://www.bls.gov/news.release/archives/cpi_11102022.htm
- Producer Price Indexes, October 2022https://www.bls.gov/news.release/archives/ppi_11152022.htm