Overview

Contents

Data
    • The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. This contrasts with other measures, such as the Consumer Price Index (CPI), that measure price change from the purchaser's perspective. Sellers' and purchasers' prices may differ due to government subsidies, sales and excise taxes, and distribution costs.
    • There are three main PPI publication structures:
      • Industry-based
        • . The PPI publishes over 600 industry price indexes in combination with over 5,000 specific product line and product category sub-indexes.
      • Commodity-based
        • . The PPI publishes over 2,000 commodity price indexes organized by type of product and end use.
      • Stage-of-processing based
        • . The PPI publishes aggregate price indexes organized by commodity-based processing stage. The three stages of processing include Finished Goods; Intermediate Materials, Supplies, and Components; and Crude Materials for Further Processing.
    • Other publication structures include:
      • Producer price indexes by durability of product.
      • Special commodity groupings (e.g., Fabricated metal products, Construction materials, and Selected textile mill products).

Coverage
    • The PPI tracks price change for practically the entire output of domestic goods-producing sectors: agriculture, forestry, fisheries, mining, scrap, and manufacturing.
    • In recent years, the PPI has extended coverage to many of the non-goods producing sectors of the economy, including transportation, retail trade, insurance, real estate, health, legal, and professional services.
    • The PPI continues to increase coverage of several other non-goods producing sectors of the economy. New PPIs are gradually being introduced for the products of industries in the utilities, finance, business services, and construction sectors of the economy.

Data source
    • The PPI sample includes over 25,000 establishments providing approximately 100,000 price quotations per month.
    • Participating establishments report price data primarily through the mail.
    • Goods and services included in the PPI are weighted by value-of-shipments data contained in the 1997 economic censuses.
    • Industries and products are systematically resampled as needed.

Reference date
    • For most items, establishments report product selling prices for the Tuesday of the week containing the 13th of each month.

Publications
    • Producer Price Indexes are usually made available during the second full week of the month following the reference date. The monthly news release contains a textual explanation of aggregate index movements and various supporting data tables.
    • The PPI Detailed Report is printed and mailed during the middle of the second month following the reference date.
    • Selected PPI indexes are published in the BLS Monthly Labor Review.
    • A limited amount of historical data is made available through the Handbook of Labor Statistics.
    • Electronic access is available through a world wide web (WWW) site and a file transfer protocol (FTP) service.

Uses
    • Contract escalation.
      •  PPI data are commonly used in escalating purchase and sales contracts. These contracts typically specify dollar amounts to be paid at some point in the future. It is often desirable to include an escalation clause that accounts for changes in input prices. For example, a long-term contract for bread may be escalated for changes in wheat prices by applying the percent change in the PPI for wheat to the contracted price for bread. (See Escalation Guide for Contracting Parties.)
    • Indicator of overall price movement at the producer level.
      •  PPIs capture price movement prior to the retail level. Therefore, they may foreshadow subsequent price changes for business and consumers. The President, Congress, and the Federal Reserve employ these data in formulating fiscal and monetary policies.
    • Deflator of other economic series.
      •  PPIs are used to adjust other time series for price changes and to translate those series into inflation-free dollars. For example, constant-dollar gross domestic product data are estimated using deflators based on the PPI.
    • Measure of price movement for particular industries and products.
    • Comparison of input and output costs.
    • Comparison of industry-based price data to other industry-oriented economic time series.
    • Forecasting.
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    • LIFO (i.e., last-in, first-out) inventory valuation.

Research in progress
    • Services sector coverage expansion.
    • Development of a stage-of-processing aggregation scheme based upon the flow of economic transactions through the economy inclusive of the entire domestic output of goods and services.

Additional information

 

Last Modified Date: March 18, 2004