A rise in PPI signals an increase in inflationary pressures. Given the economic instability associated with rising price levels, the Fed often will raise interest rates to check inflation. A low or falling PPI is indicative of declining prices, and may suggest an economic slowdown.
The headline figure is expressed in percentage change of producer price.
Notes: The PPI records prices at various stages of production: raw goods, intermediate goods and finished goods. Though intermediate and crude goods price do provide insight for future inflationary pressure, it is the price of finished goods that generates most interest for market participants. The finished goods data is able to gauge price pressure before the goods reach the retail market.
Core PPI, Excluding Food and Energy
The PPI is also reported without the volatile food and energy components. In addition to being seasonally volatile, the two comprise a significant portion of US goods. As a result, any sudden disruption in oil or food supplies will significantly distort the Producer Price Index inflation assessment. By excluding such entities, Core PPI is able to provide a truer, more consistent picture of US inflation trends.
Relevance: Moderate market impact
Release schedule : 12:30 (GMT); monthly, 2 weeks after the reporting month
Revision schedule: one monthly revision after four months, annual revisions every February
Source of report : Bureau of Labor statistics, Department of Labor
Web Address : www.bls.gov
Address of release : http://www.bls.gov/ppi/
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