Menu
Home
People
Places
Arts
History
Plants & Animals
Science
Life & Culture
Technology
Reference.org
Producer price index
open-in-new
<h2 id="coverage">Coverage</h2> <p>The PPI system encompasses the production of all industries in the sectors involved in manufacturing goods:<a class="footnote-ref" id="fnref:4" href="#fn:4"><sup>4</sup></a> </p> <ul><li>Mining</li> <li>Manufacturing</li> <li>Agriculture</li> <li>Fishing</li> <li>Forestry</li> <li>Gas</li> <li>Electricity</li> <li>Waste</li> <li>Scrap materials</li></ul> <p>Imports are excluded, but locally produced goods that are transported between businesses owned by the same corporation are included. Items produced domestically specifically for the military are also included.<a class="footnote-ref" id="fnref:5" href="#fn:5"><sup>5</sup></a> </p> <h2 id="calculation">Calculation</h2> <p>The PPI is determined by taking the average weighted price of goods and services produced in the U.S. for the current month and year, dividing it by the average weighted prices of goods and services produced in the U.S. during a base month and year, and then multiplying the outcome by 100.<a class="footnote-ref" id="fnref:6" href="#fn:6"><sup>6</sup></a> </p><p>For example, if the average weighted price of goods and services in the U.S. during July 2023 is $120, and the average weighted price during the base month, January 2022, is $100, the PPI for July 2023 would be calculated as follows: </p><p>PPI = (Average Weighted Price in July 2023 / Average Weighted Price in January 2022) x 100 = ($120 / $100) x 100 = 120 </p><p>Thus the PPI for July 2023 would be 120. </p> <h2 id="related-measures">Related measures</h2> <p>A number of countries that now report a producer price index previously reported a <a href="/facts/Wholesale_price_index/fcpRjlvt">wholesale price index</a>. </p> <h2 id="by-country">By country</h2> <h3>United States</h3> <p class="note">Main article: <a href="/facts/U.S._Producer_Price_Index/GIePIUFR">U.S. Producer Price Index</a></p> <p>In the US, the PPI was known as the <i>wholesale price index</i>, or WPI, up to 1978. The PPI is one of the oldest continuous systems of statistical data published by the <a href="/facts/Bureau_of_Labor_Statistics/BwSDI1GE">Bureau of Labor Statistics</a>, as well as one of the oldest economic time series compiled by the <a href="/facts/Federal_government_of_the_United_States/VJCxUaf7">Federal Government</a>.<a class="footnote-ref" id="fnref:7" href="#fn:7"><sup>7</sup></a> The origins of the index can be found in an 1891 <a href="/facts/U.S._Senate/VyzXHE01">U.S. Senate</a> resolution authorizing the <a href="/facts/Senate_Committee_on_Finance/QCy58m4Q">Senate Committee on Finance</a> to investigate the effects of the tariff laws "upon the imports and exports, the growth, development, production, and prices of agricultural and manufactured articles at home and abroad".<a class="footnote-ref" id="fnref:8" href="#fn:8"><sup>8</sup></a> </p> <h3>India</h3> <p class="note">Main article: <a href="/facts/Producer_Price_Index_(India)/B2TfjrD6">Producer Price Index (India)</a></p> <p>The <a href="/facts/India/1kKHcnxM">Indian</a> wholesale price index (WPI) was first published in 1902, and the country now uses <a href="/facts/CPI/cCdp5jkt">CPI</a>. No PPI is formulated in India.<a class="footnote-ref" id="fnref:9" href="#fn:9"><sup>9</sup></a><a class="footnote-ref" id="fnref:10" href="#fn:10"><sup>10</sup></a> </p> <h2 id="see-also">See also</h2> <ul><li><a href="/facts/Consumer_price_index/cCdp5jkt">Consumer price index</a></li> <li><a href="/facts/Inflation/YvKtKrVI">Inflation</a></li> <li><a href="/facts/Substitute_good/oK7UJNjw">Substitute good</a></li> <li><a href="/facts/2000s_commodities_boom/vIIenKsU">2000s commodities boom</a></li> <li><a href="/facts/2020s_commodities_boom/tbat1Smb">2020s commodities boom</a></li></ul> <h2 id="external-links">External links</h2> <ul><li><a href="http://www.imf.org/external/np/sta/tegppi/index.htm">IMF PPI manual</a></li> <li><a href="http://www.bls.gov/ppi/">United States PPI Homepage</a></li> <li><a href="http://www.bls.gov/ppi/home.htm#data">Get US PPI statistics</a></li> <li><a href="https://fraser.stlouisfed.org/title/63">Historical PPI releases</a></li> <li><a href="http://www.frenchkpi.com/french-ppi-composition-and-evolution/">French PPI composition and evolution</a> <a href="https://web.archive.org/web/20160625094906/http://www.frenchkpi.com/french-ppi-composition-and-evolution/">Archived</a> 2016-06-25 at the <a href="/facts/Wayback_Machine/nmQ3a6JC">Wayback Machine</a></li></ul> <h2 id="references">References</h2> <ol> <li id="fn:1"><p>"Producer Price Index Home: U.S. Bureau of Labor Statistics". www.bls.gov. Retrieved 2023-07-24. <a href="https://www.bls.gov/ppi/" target="_blank">https://www.bls.gov/ppi/</a> <a href="#fnref:1" class="footnote-back-ref">↩</a></p></li> <li id="fn:2"><p>The Economist, Volume 387, May 31 – June 6, 2009, p. 109 <a href="#fnref:2" class="footnote-back-ref">↩</a></p></li> <li id="fn:3"><p>"Britannica Money". www.britannica.com. Retrieved 2023-07-24. <a href="https://www.britannica.com/money/measure-inflation-cpi-ppi-pce" target="_blank">https://www.britannica.com/money/measure-inflation-cpi-ppi-pce</a> <a href="#fnref:3" class="footnote-back-ref">↩</a></p></li> <li id="fn:4"><p>Salvucci, Jeremy (2023-06-15). "What Is the Producer Price Index (PPI) & Why Is It Important?". TheStreet. Retrieved 2023-07-24. <a href="https://www.thestreet.com/dictionary/p/producer-price-index" target="_blank">https://www.thestreet.com/dictionary/p/producer-price-index</a> <a href="#fnref:4" class="footnote-back-ref">↩</a></p></li> <li id="fn:5"><p>"Validation request" (PDF). www.conference-board.org. Retrieved 2023-07-24. <a href="https://www.conference-board.org/pdf_free/economics/bci/BCI-Handbook.pdf" target="_blank">https://www.conference-board.org/pdf_free/economics/bci/BCI-Handbook.pdf</a> <a href="#fnref:5" class="footnote-back-ref">↩</a></p></li> <li id="fn:6"><p>"Producer Price Index Frequently Asked Questions : U.S. Bureau of Labor Statistics". www.bls.gov. Retrieved 2023-07-24. <a href="https://www.bls.gov/ppi/faqs/questions-and-answers.htm#6" target="_blank">https://www.bls.gov/ppi/faqs/questions-and-answers.htm#6</a> <a href="#fnref:6" class="footnote-back-ref">↩</a></p></li> <li id="fn:7"><p>"Chapter 14 Producer Prices, Background". BLS Handbook of Methods. Archived from the original on 2010-12-13. <a href="https://web.archive.org/web/20101213024233/http://www.bls.gov/opub/hom/homch14_a.htm" target="_blank">https://web.archive.org/web/20101213024233/http://www.bls.gov/opub/hom/homch14_a.htm</a> <a href="#fnref:7" class="footnote-back-ref">↩</a></p></li> <li id="fn:8"><p>Senate Committee on Finance, Wholesale Prices, Wages, and Transportation, Senate Report No. 1394, "The Aldrich Report," Part I, 52nd Congress, 2d sess., March 3, 1893; and U.S. Department of Labor, Course of Wholesale Prices, 1890–1901, Bulletin No. 39, March 1902, pp. 205–09. <a href="http://www.bls.gov/ppi/ppicpippi.htm" target="_blank">http://www.bls.gov/ppi/ppicpippi.htm</a> <a href="#fnref:8" class="footnote-back-ref">↩</a></p></li> <li id="fn:9"><p>"New WPI series: India moves to concept of producer price index to better gauge actual price pressure in economy". <a href="http://www.financialexpress.com/economy/new-wpi-series-india-moves-to-concept-of-producer-price-index-to-better-gauge-actual-price-pressure-in-economy/666547/" target="_blank">http://www.financialexpress.com/economy/new-wpi-series-india-moves-to-concept-of-producer-price-index-to-better-gauge-actual-price-pressure-in-economy/666547/</a> <a href="#fnref:9" class="footnote-back-ref">↩</a></p></li> <li id="fn:10"><p>"...it would be desirable to initiate steps to develop a producer price index (PPI) for the country". <a href="https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=457" target="_blank">https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=457</a> <a href="#fnref:10" class="footnote-back-ref">↩</a></p></li> </ol>