What Is PPI?

You have probably come across the word PPI used in discussions of inflation or the economy—but what does PPI actually mean?

PPI is the acronym for the Producer Price Index. Unlike the CPI (Consumer Price Index) that focuses on the amount that the consumer pays for goods and services, the PPI focuses on the amount that the producer gets for the goods and services that are provided. Essentially, it is the amount that the producer gets before it trickles down to the consumer.

But what is a PPI, and what is it used for? Well, it is an inflation indicator. In other words, if the PPI is increasing, then it is likely that the CPI will also go up, which is why this indicator is closely monitored by economists and policymakers.

Well, when is PPI released? In the US, the BLS releases PPI on a monthly basis a week before the release of the CPI report. This provides valuable information on pricing in sectors such as manufacturing, farming, energy, and so on.

To sum up: what is PPI? It is a very important tool used in economics that provides data about what producers are being compensated for their work and gives a glimpse of what is happening in terms of price changes before they occur in stores and in people’s wallets.