Producer Price Index (PPI)

The Producer Price Index, or PPI, measures the average change in the prices that domestic producers receive for their output — prices at the factory gate rather than at the checkout. Most major economies publish it monthly, close to the consumer inflation release. Traders follow PPI as a leading indicator of consumer inflation: when input and output costs climb, businesses often pass part of the increase on to households later. A reading well above or below forecast can therefore shift interest rate expectations and move the currency. The reaction is usually smaller than for the consumer price index, which most central banks target directly, but PPI helps confirm or question the inflation trend.