The Producer Price Index (PPI) is a measure of the average changes in the selling prices received by domestic producers for their output. It is a family of indexes that measures the average change over time in the prices received by domestic producers of goods and services. The PPI is often used as a leading indicator of inflation, as changes in the costs of production for producers can be passed on to consumers in the form of higher prices for goods and services.
The PPI is calculated on a monthly basis by the Bureau of Labor Statistics (BLS) in the United States. The index is compiled from data on prices collected from a sample of establishments that represent the output of the mining, manufacturing, agriculture, fishing, and forestry sectors, as well as some services industries. The PPI is based on prices for goods that are purchased by wholesalers and other intermediate purchasers, as well as prices for services that are purchased by businesses.
The PPI is often used by businesses to help them make pricing decisions, as well as by policymakers to gauge inflationary pressures in the economy. It is also used as a benchmark for price adjustments in contracts, as well as for government economic analysis and forecasting.
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