Producer Price Index
a.k.a. PPI
A measure of the prices businesses receive for their goods and services, often an early warning of…
In plain English
A measure of the prices businesses receive for their goods and services, often an early warning of consumer inflation.
The Producer Price Index (PPI) tracks inflation from the seller's side: what factories, farms and service firms charge for their output. If the cost of steel, fuel or freight jumps, it shows up here first.
Because businesses tend to pass higher costs on to shoppers eventually, traders treat PPI as a preview of the CPI. It is not a perfect predictor (companies sometimes eat the cost in their margins), but a big surprise can still jolt the currency.
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