Producer Price Index (PPI): Upstream Inflation Data

What Is PPI?

The Producer Price Index measures price changes from the seller's perspective—what producers receive for their output.

Think of it as "wholesale" inflation vs CPI's "retail" inflation.

PPI vs CPI

Key insight: PPI often leads CPI. Wholesale price changes eventually pass through to consumers.

PPI Categories

Final Demand PPI

FRED Series: PPIFIS | IQ Score: 95

• Headline measure
• Prices for finished goods ready for use

Final Demand Less Food & Energy

FRED Series: PPIFES | IQ Score: 95

• "Core" PPI
• Excludes volatile components

Intermediate Demand

Prices at earlier production stages:

• Stage 4: Most processed
• Stage 3: Moderately processed
• Stage 2: Less processed
• Stage 1: Unprocessed

Why it matters: Stage 1 changes signal future final demand changes.

Industry-Specific PPI

Construction

FRED Series: PCUBCONACONS

• Input costs for builders
• Materials + labor

Healthcare

FRED Series: PCU621621

• Hospital services
• Physician services
• Insurance impacts

Transportation

FRED Series: PCUTRANSTRANS

• Trucking, air freight, rail
• Logistics cost indicator

PPI Release Details

Schedule

• Frequency: Monthly
• Release: Second week of month (for prior month)
• Time: 8:30 AM ET

What Markets Watch

• Headline MoM change

• Core PPI (less food & energy)

• Services vs goods breakdown

• Intermediate demand pipeline

Using PPI for Forecasting

CPI Preview

PPI Final Demand can preview CPI 1-3 months ahead:

• Goods PPI → Goods CPI
• Services PPI → Services CPI (less direct)

Margin Analysis

Company margins = Output prices - Input prices

If input PPI rises faster than output PPI → Margin squeeze

Industry Cost Trends

Track industry PPI for:

• Raw material cost trends
• Sector inflation pressures
• Pricing power analysis

Historical Patterns

2021-2022 Inflation Surge

PPI peaked first, signaling CPI would follow.

Why PPI Can Diverge

• CPI includes rent (largest component)—PPI doesn't
• Import prices affect CPI more directly
• Services pass-through is slow

Global PPI Data

Eurostat PPI

IQ Score: 92

• EU industrial producer prices
• Domestic + export markets

China PPI

Important for global goods inflation

• Factory gate prices
• Deflationary in 2023

Japan Corporate Goods Price Index

• Bank of Japan measure
• Yen-sensitive

Practical Applications

Inflation Forecasting

• Watch intermediate demand for early signals

• Compare goods PPI to goods CPI

• Use 1-3 month lag assumption

Company Analysis

• Input cost trends
• Pricing power indicators
• Margin sustainability

Fed Policy Implications

Fed watches PPI for:

• Supply chain pressures
• Pass-through risk to CPI
• Corporate cost pressures

All PPI series available on DataSetIQ with component breakdowns and IQ scoring.