Producer price index (PPI),
Definition of Producer price index (PPI):
The producer price index (PPI), published by the Bureau of Labor Statistics (BLS), is a group of indices that calculates and represents the average movement in selling prices from domestic production over time.
Relative measure of average change in price of a basket of representative goods and services sold by manufacturers and producers in the wholesale market. A family of three indices (finished goods, intermediate goods, and raw materials or crude commodities), it is used as an indicator of rate of inflation or deflation. In contrast to the consumer price index (CPI) which measures price changes from the consumers perspective, PPI measures them from the sellers perspective. Older name wholesale price index.
The PPI measures price movements from the seller's point of view. Conversely, the consumer price index (CPI), measures cost changes from the viewpoint of the consumer. In other words, this index tracks change to the cost of production. There are three areas of PPI classification that use the same pool of data from the Bureau of Labor Statistics namely industry, commodity. and commodity-based final and intermediate demand (FD-ID).
How to use Producer price index (PPI) in a sentence?
- The producer price index was indicative of the fluctuation elements in the equation as many variables needed to be understood.
- The PPI is considered an objective tool for adjusting prices in long-term purchasing agreements.
- The BLS separates PPI data into three main areas of classification namely industry, commodity, and commodity-based final and intermediate demand (FD-ID).
- You need to be able to accurately assess the producer price index to figure out how much profit you can make off a product.
- The PPI is different from the CPI in that it measures costs from the viewpoint of industries that make the products whereas the CPI measure prices from the perspective of consumers.
- I was really interested in price changes and would always consult with the producer price index to see what was happening.
Meaning of Producer price index (PPI) & Producer price index (PPI) Definition