The Producer Price Index (PPI) is an inflationary measure similar to the CPI. The difference, though, is while the CPI measures the change in what a consumer pays, the PPI measures the change in what the producer or manufacturer pays for the raw materials they use. Over 16,000 establishments provide about 64,000 price quotations every month creating the pool of information used to determine the PPI. The monthly PPI report publishes more than 3,800 commodity price indexes for goods and more than 900 services.
The PPI helps economists foresee inflation. It is also used for tracking price changes by industry and comparing wholesale and retail price trends. The PPI does not include the price of imported goods; however, it does include export prices. The PPI is useful for tracking the production flow price changes as products move through the various stages of production and manufacturing. This allows the production flow to be monitored, which helps economists to assess the degree of change in inflation rates producers face at earlier stages of production and throughout the manufacturing process to the final product.
The Producer Price Index for final demand fell 0.1 percent in December. Prices for final demand goods decreased 0.4 percent, while the index for final demand services remained unchanged. Prices for final demand rose 1.0 percent in 2023.