A US Bureau of Labor Statistics producer-price taxonomy that reclassifies PPI commodities by their position in the production chain — final demand (goods, services, construction sold to end users) versus intermediate demand (inputs sold to businesses) — replacing the older stage-of-processing framework to trace cost pressures through the pipeline.
How it works
The system splits the producer-price universe into a final-demand aggregate (the headline PPI) and several intermediate-demand tiers, organised both by commodity type and by sequential production stages (Stage 1 through Stage 4). The stage-based cut lets analysts watch price impulses propagate from raw inputs downstream toward final demand.
Why it matters now
With 2022-2025 inflation driven by supply-chain and tariff cost pass-through, the intermediate-demand tiers offer a leading read on pipeline pressure before it reaches final-demand PPI and, eventually, core PCE — useful for gauging whether tariff and energy shocks are still feeding through.
Example
In the BLS PPI report, final-demand PPI is the quoted headline (e.g. a monthly print of +0.2%), while the FD-ID intermediate-demand "processed goods for intermediate demand" and stage-2/stage-3 indexes are scanned over 2020-2025 to see whether upstream cost spikes — say in metals or energy inputs — are still climbing the production chain toward consumer-facing prices.
Frequently asked
- What are FD-ID price indexes?
- FD-ID price indexes are the US Bureau of Labor Statistics producer-price taxonomy that classifies PPI commodities by their position in the production chain — final demand versus intermediate demand. Introduced in 2014 to replace the older stage-of-processing framework, the system tracks cost pressures as they propagate from raw inputs downstream toward goods, services, and construction sold to end users.
- How do FD-ID indexes differ from the stage-of-processing framework?
- FD-ID indexes classify commodities by who buys them — final users versus other businesses — whereas the older stage-of-processing system grouped goods by physical processing level (crude, intermediate, finished). The BLS adopted FD-ID as the headline PPI structure in January 2014 because it covers services and construction, not just goods, giving roughly 75% economy coverage versus the goods-only legacy system.
- What is the difference between final demand and intermediate demand PPI?
- Final-demand PPI measures prices of goods, services, and construction sold to end users — households, government, exporters, capital investment — and is the headline number BLS quotes monthly. Intermediate-demand PPI measures prices of inputs sold to businesses for further production, split into four sequential stages. Watching intermediate tiers gives a leading read on pressure heading toward final demand.
- Why do FD-ID intermediate-demand indexes matter for inflation forecasting?
- Intermediate-demand indexes signal pipeline cost pressure before it reaches final-demand PPI and, eventually, core PCE. During 2022-2025 tariff and energy shocks, desks scanned stage-2 through stage-4 indexes to judge whether upstream spikes in metals or energy inputs were still climbing toward consumer-facing prices or had peaked.
- What are the four stages in the FD-ID intermediate demand system?
- The FD-ID intermediate-demand system orders production into four sequential stages, where each stage's output is primarily consumed by the next stage downstream toward final demand. Stage 4 sits closest to final demand and Stage 1 furthest upstream. This stage-based cut lets analysts trace how a price impulse in raw inputs propagates through the production chain over successive months.