The producer price index (PPI) is a measure of prices charged by producers for domestically produced goods, services, and construction. In the US it is constructed by the Bureau of Labor Statistics in a fashion similar to the consumer price index (CPI) except it measures prices received from the producer’s perspective. It is another one of the various measures of inflation tracked by the US Fed, along with the CPI and core personal consumption expenditure (PCE).
The latest figures for July have been published by the Bureau and they indicate producer prices were unchanged across the month. The result was less than the expected +0.2% and lower than May’s +0.3%. On a 12-month basis, the rate of producer price inflation dropped back to 3.2% after recording 3.3% in June and 3.1% in May.
ANZ senior economist Joanne Masters said the report suggests “inflation is not getting away from the Fed any time soon.” However, Westpac’s Finance AM team warned against complacency. “Notwithstanding the weaker than expected outcome, upstream input cost pressures are building thanks to the robust US economy, higher energy prices and import tariffs.”