Quick Definition

The Producer Price Index (PPI) measures the average change over time in the selling prices received by domestic producers for their output. It's a key indicator of inflation at the wholesale level.

Examples

• 1A rise in PPI indicates that producers are receiving higher prices for their goods, which can lead to higher consumer prices if the increased costs are passed on.
• 2A decline in PPI suggests that producers are receiving lower prices, which could lead to lower inflation rates if the savings are passed on to consumers.
• 3PPI data can influence central bank policies; for example, a consistently high PPI might prompt a central bank to raise interest rates to curb inflation.
• 4Investors use PPI data to predict the profitability of industries; if PPI is rising, companies in that sector might face higher production costs, affecting their profit margins.

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