Producer Price Index (PPI)
Measures price changes at the wholesale/producer level — a leading indicator of consumer inflation since input costs roll into retail prices.
The Producer Price Index (PPI) tracks price changes from the seller's perspective — what manufacturers and wholesalers receive for their output. Because input costs eventually pass through to consumers, PPI is often viewed as a leading indicator for CPI.
A sharp rise in PPI can signal that consumer inflation is building in the pipeline, prompting preemptive tightening from a central bank. Conversely, falling PPI can signal disinflationary pressure before it shows up in CPI — useful for anticipating the next policy pivot.
Related Terms
Consumer Price Index (CPI)
Tracks changes in the price of a fixed basket of consumer goods and services — the most closely watched inflation gauge.
BeginnerCore PCE
The Fed's preferred inflation gauge: the PCE price index excluding food and energy — the gauge the Fed watches to track its 2% inflation goal.
IntermediateFederal Reserve
The U.S. central bank — its rate decisions and forward guidance move global markets more than any other single institution.
BeginnerInflation
The rate at which the general price level of goods and services rises, eroding purchasing power over time.
BeginnerLeading Indicator
An economic data point that tends to move before the broader economy — useful for anticipating turning points before they show up in lagging hard data.
Intermediate