Inflation measured at the factory gate, before it reaches store shelves.
The Producer Price Index tracks how much prices are changing for businesses, what a manufacturer or wholesaler pays for materials and goods, rather than what a shopper pays at checkout. It's often described as a leading indicator for consumer inflation, since higher costs for producers tend to get passed along to customers a few months later. Economists watch PPI alongside CPI for exactly that reason: a sudden jump in producer prices can be an early warning that consumer inflation is about to follow, even before it shows up in a household's own bills.
Part of the Open Bell Glossary — plain-English explanations of the terms that come up on the show. Browse every term.