By Megan Leonhardt

The Bureau of Labor Statistics recently said it planned to discontinue calculating and publishing wholesale pricing data on hundreds of products in the Producer Price Index. The changes won't have a widespread effect on tracking inflation trends, however.

The PPI measures inflation at the wholesale level and can provide insights into when price changes will start to hit consumers. Beginning with the July measure of the index that is slated to be published on Aug. 14, the statistics agency won't calculate and publish about approximately 350 indexes within the wholesale inflation database, according to a notice that the BLS published on May 14.

The indexes on the chopping block span 34 industries and include data from PPI industry, commodity, final demand-intermediate demand, and special index classifications. Among the industries for which data no longer will be calculated and published are doll, toy, and game manufacturing, greeting-card publishing, and fiberoptic cable manufacturing.

The BLS told Barron's in a statement on Friday that the discontinued indexes represent less than 1% of the PPI data. The agency publishes approximately 10,000 indexes for individual products and groups of products each month.

"Their removal will have minimal impact on the accuracy of the PPI final demand index," the agency said. "[The] BLS discontinues series when they can no longer be supported with existing resources."

The biggest drivers of the proposed cuts are declining response rates and chronic underfunding of the agency, says Erica Groshen, senior economics advisor at Cornell University and a former BLS Commissioner.

"BLS has had inflation-adjusted cuts in its budget for a very long time -- for two decades -- so some of those chickens are coming home to roost, " Groshen told Barron's.

The agency has long struggled to get the funding it needs to modernize and find and test new data sources. The push by the Trump administration to reduce the federal workforce hasn't helped, Groshen says. The Department of Government Efficiency has sought to trim the head count at the Department of Labor, which oversees the BLS, and the White House urged the Senate Appropriations Committee earlier this month to cut the Labor Department's budget.

Groshen said that as far as she is aware, the decision to discontinue the PPI data collection is being made by the agency's leadership to "do what they can to make the best of it."

The PPI is closely watched, not only for a read on how inflation is affecting wholesale inputs, but also because the Bureau of Economic Analysis uses some of the data set in its calculation of the Federal Reserve's preferred inflation gauge, the personal consumption expenditures price index.

The data slated for cuts, however, "won't pose a problem" in estimating PCE inflation, Joseph Brusuelas, chief economist at RSM US, said.

While it isn't routine for the BLS to discontinue so many series at once, the latest changes account for a fairly small weighting in the overall PPI, says Conrad DeQuadros, senior economic advisor at Brean Capital.

Accordingly, he doesn't expect the changes to affect the calculation of PCE prices. The main PPI inputs to PCE prices are healthcare services, portfolio management, and some other finance and insurance series, and airfares, DeQuadros says. None of these will be discontinued.

Typically, when decisions are made to discontinue or revise data publication, Groshen says the BLS would reach out to other potentially affected agencies to discuss the changes.

The producer price index for April unexpectedly fell 0.5% month over month and registered a 2.4% annual growth rate.

The details of PPI, along with the April measure of the consumer price index, imply that PCE inflation -- which is scheduled for release on May 30 -- likely rose just 0.1% month over month in April. Economists surveyed by FactSet expect headline PCE inflation was 2.6% year over year in April.

Additional reporting by Nicole Goodkind.

Write to Megan Leonhardt at megan.leonhardt@barrons.com

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May 23, 2025 17:48 ET (21:48 GMT)

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