The producer price index for services is a business cycle indicator that provides information on price developments in numerous service sectors. This information is used for the analysis of inflation and its sources, but also for the deflation of value measures in the services sector.
Figure 1 shows aggregate output prices for services in the EU and the euro area. The indicators cover all service sectors for which output prices for services are collected according to the European Business Statistics Regulation (EC) of 27 November 2019, i.e. road, water and air transport, storage and freight handling, telecommunication services, food and beverage services, legal services and accounting, management consultancy, advertising and market research, employment, security and cleaning services.
Between their introduction in 2006 and mid-2008, aggregate producer prices for services rose relatively steadily. During the economic and financial crisis, prices fell between mid-2008 and mid-2009. Since the third quarter of 2009, prices have risen more or less steadily, and the euro area price aggregate already exceeded its pre-crisis peak by the end of 2014. In 2015 and early 2016, prices declined slightly again. Since then, producer prices for services in the EU and the euro area have risen steadily. In particular, prices rose quite dynamically in the last quarters of 2020 and the first quarter of 2021.
Figure 2 provides an overview of prices for various transport services. In general, a relatively steady upward trend can be observed for transport services, especially for road transport and warehousing and auxiliary transport services. Air transport also shows a long-term increase, but with a clear temporal pattern of price increases in the second and third quarters and regular price decreases in the fourth quarter. In shipping, producer prices have followed a very particular trajectory, with a sharp decline between the last quarter of 2008 and the second quarter of 2009, possibly due to overcapacity at the beginning of the crisis, and an equally steep increase in the following periods. Prices fell sharply again in 2015 and 2016. In the last quarter of 2020 and the first quarter of 2021, shipping prices rose again significantly. Due to the comparatively large price fluctuations in shipping and despite its relatively small share in the total aggregate of short-term statistics (STS), the ups and downs of shipping prices can have a significant impact on the overall price level of services.
The producer price index for services shows what shippers all over Europe are facing everyday: A high demand on goods confronted with a shortage of free truck capacities. This combination is always resulting in in higher freight rates that have to be paid.