Producer Price Index (PPI)
A measure of average price changes received by domestic producers for their goods and services.
What is PPI?
The Producer Price Index (PPI) measures the average change over time in the selling prices received by domestic producers for their output — essentially inflation from the seller's perspective rather than the buyer's. Published monthly by the US Bureau of Labor Statistics, PPI tracks prices at the wholesale level before goods reach consumers. Because producer price changes often pass through to consumer prices with a lag of weeks to months, PPI is considered a leading indicator of consumer inflation (CPI). The PPI covers three areas: final demand, intermediate demand, and raw materials, giving a full picture of where inflationary pressure is building in the production chain.
Example
In March 2022, the US PPI for final demand rose 11.2% year-over-year — a record high driven by energy, food, and supply-chain disruptions — foreshadowing the subsequent surge in consumer inflation that peaked at 9.1% in June 2022.