- 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
- 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).
- The PPI tracks price change for practically the entire output of domestic
goods-producing sectors: agriculture, forestry, fisheries, mining, scrap, and
- 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.
- 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.
- For most items, establishments report product selling prices for the Tuesday of the week
containing the 13th of each month.
- 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
- Electronic access is available through a world
wide web (WWW) site and a file transfer protocol (FTP)
- 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
- 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.
- LIFO (i.e., last-in, first-out) inventory valuation.
- 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
Last Modified Date: March 18, 2004