What is the Producer Price Index?
This index measures the average change in selling prices received by domestic producers of goods and services. Focusing on price changes from the seller perspective instead of the consumer’s. Government subsidies, sales and excise taxes, and distribution cost can impact the difference in prices between producers and consumers. The Producer Price Index covers almost every major sector of the U.S. economy including mining, manufacturing, agriculture, fishing, forestry, and more.
Why is the Producer Price Index valuable?
There’s a lot of practical uses for this index which makes it valuable to almost every major industry. One of the main uses of the PPI is contract adjustment. Producers can uses the data provided to adjust their purchasing and sales contracts to accurately reflect the market. Additionally, it’s a great tool for forecasting. Whether you’re looking to measure price movements for specific industries and products or trying to gauge potential consumers and businesses.
What should you do?
If you’re looking for an indicator that compares input and output costs of producers, following the Producer Price Index is a great place to start. Majestic’s CORE Report follows the Producer Price Index; along with other indicators every week to see where the market stands.