what is the producer price index ppi 
the producer price index ppi measures the average change over time in the prices domestic producers receive for their output it is a measure of inflation at the wholesale level that is compiled from thousands of indexes measuring producer prices by industry and product category the index is published monthly by the u s bureau of labor statistics bls the ppi is different from the consumer price index cpi which measures the changes in the price of goods and services paid by consumers understanding the producer price index ppi the ppi measures inflation or much less commonly deflation from the perspective of the product manufacturer or service supplier the price trends for producers and consumers are unlikely to diverge for long since producer prices heavily influence those charged to consumers and vice versa in the short term inflation at the wholesale and retail levels may differ as a result of distribution costs as well as government taxes and subsidies 1the bls releases the ppi along with its constituent industry and product indexes during the second week of the month following the reference date of the survey it is based on approximately 100 000 monthly price quotes reported voluntarily online by more than 25 000 systematically sampled producer establishments 23the ppi reading for the 12 months ending may 2024 on an unadjusted basis the index for final demand decreased by 0 2 in may from april 4the survey covers the entirety of the u s output of goods and about 69 by value of services its component product and services indexes are weighted based on the value of the category s output to calculate the overall change in producer prices 5the ppi is used to forecast inflation and to calculate escalator clauses in private contracts based on the prices of key inputs it is also vital for tracking price changes by industry and comparing wholesale and retail price trends 5producer price index ppi vs consumer price index cpi both ppi and cpi are important economic measures because they point to monthly changes in prices but they reflect prices from different standpoints as noted above the ppi measures prices based on the first commercial transaction for a product or service 5this is in contrast to the consumer price index which measures price changes encountered by the consumer 6the cpi s focus is on the final sale but these two indexes don t just differ based on the type of prices measured there are also important compositional differences between the ppi and the cpi that can be considered these distinctions are based on what s included and left out of each until 1978 the ppi was known as the wholesale price index wpi in 1982 the bls reset all producer price index bases to 100 7for example the ppi does not measure price changes for aggregate housing costs while the cpi s shelter category including the imputed owners equivalent of rents accounts for one third of the overall index meanwhile the ppi incorporates a weighting of nearly 16 6 for healthcare services not far off the sector s weight of nearly 20 in the u s gross domestic product gdp in contrast the cpi s weighting for medical care is 8 that s because it doesn t measure third party healthcare reimbursements 89another key distinction is that the ppi does not include the price of imported goods unlike the cpi conversely the ppi includes export prices while the cpi does not 10