What September’s Producer Price Index numbers say
In a possible warning sign before Thursday morning’s release of September Consumer Price Index (CPI) data, the Bureau of Labor Statistics said today that wholesale prices (the Producer Price Index or PPI) grew by 0.4% last month, or 8.5% on a 12-month basis — more than analysts were expecting. So what does that mean?
- The PPI number looks at changes in the average price of raw goods and materials purchased by producers and manufacturers. The PPI shows the real growth of the economy over time.
- The CPI looks at price changes in goods bought by consumers. It includes changes in costs on both U.S.-made products and imports; the PPI only includes domestic production.
While the CPI number is what most Americans think of as “the inflation number,” the PPI provides a broader view of prices across the economy. Also, since it deals with the costs to the companies who make the items that end up on the shelves, it is an indicator of future CPI trends. The September PPI increase could indicate that consumer prices will also continue to climb at a rapid rate for months to come.