Who / What
A producer price index (PPI) is a price index that measures the average changes in prices received by domestic producers for their output. Formerly known as the wholesale price index between 1902 and 1978, it's compiled by the U.S. Bureau of Labor Statistics (BLS) from approximately 64,000 price quotations representing thousands of goods and services.
Background & History
The PPI originated in 1902 and was known as the wholesale price index until 1978. It has been compiled by the U.S. Bureau of Labor Statistics (BLS) to represent price changes for a wide range of goods and services produced domestically. The index is based on data from over 16,000 establishments. Its importance is being reduced due to the decline in manufactured goods as a share of overall spending.
Why Notable
The PPI is significant as it provides an early indicator of potential inflation. It reflects price changes faced by producers before they are passed on to consumers, offering insights into future consumer price movements. The index is compiled from a large number of price quotations, making it representative of various sectors of the economy and important for economic analysis.
In the News
The PPI remains relevant as an indicator of inflationary pressures in the economy. Economists and policymakers closely monitor the PPI to anticipate changes in consumer prices and adjust monetary policies accordingly. Its data is frequently cited in economic news and analyses.
