Producer Price Index (PPI)

Definition

A measure of how the prices domestic producers receive for their goods and services change over time.

The index looks at prices from the seller’s side, including prices received by producers of goods and services. Some producer price increases can eventually reach shoppers. How much passes through depends on factors such as competition and whether businesses absorb the change in their margins.

Example

An index tracking prices received by domestic steel producers rises from 100 to 104. The prices tracked by that index rose 4%.