The producer price index is a government statistic that measures inflation by comparing the price of a basket of goods and services to the price of the same basket of goods and services a year ago. The basket of goods and services is made up of all goods and services produced in the U.S. The basket of services comprises all services sold in the U.S., including all goods and services that are consumed in the U.S.
The price of a basket is a good example of how inflation is measured. For example, if you buy a $20 loaf of bread a year ago, you pay $0.33. If you bought a $200 loaf of bread a year ago, you paid $0.44. This is because you bought goods and services that cost more than the basket of goods and services a year ago.
The producer price index is a relatively new measure that helps measure inflation, but it dates back to the middle of the last century. It’s a way to compare the cost of a basket of goods to the cost of a basket of services. So we’re trying to see how inflation is affecting consumer spending and buying decisions, so these are measured in the producer price index.
Consumer spending and buying decisions are influenced by many factors, including the price of the goods and services we choose to buy, but the producer price index isn’t really a reliable reflection of what those prices are. So what it does is try to adjust for that. It adjusts for the fact that prices on goods and services can change with the season, the year, and the economy, so it adjusts for that too.
It’s not perfect, but it has a lot of statistical power. You’d be crazy to think that it has no power to distort the results. A single producer price index number can dramatically shift your buying decisions.
A producer price index, or PPI, calculates what the average price of a basket of goods and services in the US was in a given week. Its most popular metric is the consumer price index, or CPI. We can calculate something similar for a variety of things, but PPI is probably the most popular. It’s the most widely used way to compare the cost to make a basket of goods or services.
This week the Producer Price Index for the third week in a row fell to a record low, and it has been there for a long time. A little while back it was at a record high. The low producer prices means that we’re spending less money. That’s good news for everyone. The good news is that it’s still up from last month’s record low. The bad news is that it’s down from the record high.
PPI is a bit more complicated than just the cost of a basket of goods and services. This week’s falling PPI is a bit more complicated than that. It is a measure of the cost of manufacturing goods and services in a particular country divided by the GDP of that country. A falling PPI is a sign that there is a lot of economic slack in a particular country, and as such it’s a sign that there’s a lot of economic growth potential.
It’s a bit of a heady cocktail. This week’s PPI reading is the lowest since the Great Recession, and it is the lowest since 2009. The good news is that this week’s PPI reading is better than the previous two weeks combined. For a reason that is currently unknown, the PPI reading has been trending down since mid-September. However, the PPI has not been below 0.4 since it was first reported.
