The Producer Price Index (PPI) tracks how prices that domestic producers get for their goods change over time. It shows inflation at the wholesale level and is created from many indexes that look at producer prices by industry and product type. The U.S. Bureau of Labor Statistics (BLS) releases this index every month.
The PPI is not the same as the consumer price index (CPI), which tracks how the prices of goods and services that consumers buy change over time.
Learn more about PPI
The PPI looks at inflation (or rarely, deflation) from the viewpoint of manufacturers or service providers. Producer prices usually affect consumer prices, so they tend to move together over time. However, in the short term, prices at the wholesale and retail levels can vary due to distribution costs and government taxes or subsidies.
The BLS publishes the PPI and its related industry and product indexes in the second week of the month after the survey date. This data comes from around 100,000 monthly price quotes that over 25,000 selected producer establishments report online.
The survey includes all goods produced in the U.S. and around 69% of the value of services. The indexes for products and services are weighted according to the value of each category’s output to determine the overall change in producer prices.
The PPI helps predict inflation and is used to determine escalator clauses in private contracts that rely on the costs of important inputs. It is also essential for monitoring price changes across different industries and for comparing trends in wholesale and retail prices.
What Is in the PPI?
The Producer Price Index tracks how the selling prices that local producers get for their goods change over time. It includes prices from the first sale of many products and some services.
Conclusion
The Producer Price Index tracks how prices change for goods and services that domestic producers sell. It reflects wholesale inflation and shows the overall condition of the economy.