Producer Price Index (PPI)
Definition of 'Producer Price Index (PPI)'
The PPI is calculated by the Bureau of Labor Statistics (BLS) and is based on data from a sample of businesses across the country. The BLS surveys businesses about the prices they receive for their products, and the PPI is calculated by averaging the changes in these prices over time.
The PPI is a useful measure of inflation because it can help to track changes in the prices of goods and services that are produced in the United States. The PPI can also be used to compare inflation rates between different countries.
The PPI is not a perfect measure of inflation, however. One limitation of the PPI is that it does not include the prices of services. This means that the PPI does not provide a complete picture of inflation for the entire economy.
Another limitation of the PPI is that it can be volatile. The PPI can be affected by changes in the supply and demand for goods, as well as by changes in the cost of production. This volatility can make it difficult to use the PPI to track inflation over time.
Despite its limitations, the PPI is a valuable tool for tracking inflation. The PPI can be used to monitor changes in the prices of goods and services that are produced in the United States, and it can also be used to compare inflation rates between different countries.
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