Montana Labor Market Blog

Research & Analysis Bureau - Montana Department of Labor & Industry


What is the Producer Price Index (PPI)?

Most people know that the CPI, or Consumer Price Index, measures changes in the cost of goods and services in the US. It is the go-to number for tracking inflation in the economy. But it is far from the sole measure of changing costs in the US.

A while back, this blog detailed the Employment Cost Index, which measures the costs of employees to employers over time.

But what is the Producer Price Index, and how does it differ from the other two? Our friends at the US Bureau of Labor Statistics (BLS) have put together a short introductory video explaining the nuts and bolts of the PPI: 

In short, the PPI tracks changes in the price of inputs for producers, and can be a leading indicator of whether consumers will pay more or less. But that's not the whole story. The PPI is actually a "family" of over 10,000 indexes, which fall under 3 index types: Industry indexes, Commodity indexes, and Final demand-intermediate demand (FD-ID) indexes. For a more in-depth explanation of the many indexes that make up the PPI, take a look at this BLS blog post.


Categories: Labor Market Info-101