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Producer Price Index (PPI)
Practical Law Glossary Item 5-580-3860 (Approx. 2 pages)
Glossary
Producer Price Index (PPI)
A family of indexes published by the Bureau of Labor Statistics that measures the average change over time in the prices US producers receive for their goods and services. The PPI and the Consumer Price Index (CPI) both measure price changes over time for a fixed set of goods and services, but they differ in:
- The composition of the set of goods and services. The PPI is the entire marketed output of US producers and includes:
- goods, services, and construction products purchased by other producers as inputs to their operations or as capital investment;
- goods and services purchased by consumers either directly from the service producer or indirectly from a retailer; and
- products sold as export and to the government.
By contrast, the CPI is the set of goods and services purchased for consumption purposes by urban US households. - How they are used. The PPI's primary use is to deflate revenue streams to measure real growth in output. By contrast, the CPI's primary use is to adjust income and expenditure streams to reflect changes in the cost of living.