PRODUCER PRICE INDEX
Release Date: Monthly
Release Coverage: Prior Month's Data
Released By: Bureau of Labor and Statistics
Official Release (daily): http://www.bls.gov/pPI/
The PPI measures the average change in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services.
This particular index contrasts with other methods that measure price change from the purchaser's perspective, such as the consumer price index (CPI). Sellers' and purchasers' prices may differ due to government subsidies, sales and excise taxes, and distribution costs. The index, which represents changes in prices for producers, generally are applied to the consumer down the value chain. It also represents the costs that are being incurred by the company, if they choose not to pass on costs to their customers.
WHAT DR. ED SAYS:
This indicator is tied to inflationary levels for companies at the production level. High levels of inflation have generally accepted affects on the bond market. The bond market reacts negatively to larger-than-expected increases in the PPI. Conversely, drops in the index are viewed favorably by investors, pushing bond prices up and yields down. As with the majority of the indicators, this inflationary index can be used to monitor the affects certain commodities may be having on producer pricing.