Inflation & Prices

Producer Price Index (PPI)

PPI measures prices received by domestic producers, so it sits UPSTREAM of CPI in the supply chain and often leads it by one to two quarters as input costs pass through to consumers. Unlike CPI it excludes imports and includes goods sold to other businesses. A widening PPI-over-CPI gap means producers are absorbing costs and margins are compressing; the reverse means they are passing costs on.