Glossary Term: PRODUCER PRICE INDEX
Definition(s) for PRODUCER PRICE INDEX:
1. ) Also known as PPI, it is an index that measures inflation in wholesale goods. It tracks the prices of food, metals, lumber oil and gas, as well as many other commodities, but does not measure the price of services. It is reported monthly by the Bureau of Labor Statistics. Economists look at trends in the PPI as an accurate precursor to changes in the consumer price index (CPI) because upward or downward pressure on wholesale prices is usually passed through to the consumer over time. Bond prices are perhaps the most responsive to PPI data. This is because inflation undercuts the value of the future interest and principal payments that bonds yield. With the consumer price index coming only days after this release, the stock market's reaction is usually delayed until the CPI either confirms or refutes what the PPI trend is indicating.
2. ) Measure of change in wholesale prices, as released monthly by the U.S. Bureau of Labor Statistics. The index is broken down into components by commodity, industry sector, and stage of processing. See also Consumer Price Index.
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