what is core ppi

what is core ppi

1 year ago 41
Nature

The Producer Price Index (PPI) is an economic indicator that measures the change in the selling prices, or wholesale prices, received by domestic producers for their output. The PPI aims to capture all domestic production, and most of the products used in its calculation fall into one of the following 10 categories: mining, manufacturing, agriculture, fishing, forestry, natural gas, construction, trade services, and government. Core PPI refers to the index of finished goods and is generally what economists refer to when the producer price index is referenced. Footwear, soap, tires, and furniture are among the items included in core PPI. When core PPI is calculated, volatile items such as energy and food prices are excluded from the core calculation. Although these omissions reduce the overall accuracy of the index, their prices are heavily influenced by temporary supply and demand imbalances that would make the index difficult to compare on a long-term basis. Luckily, the Bureau of Labor Statistics (BLS) tracks the price changes for many of these missing components, so interested analysts can recalculate the index values to include food and energy inputs. The core PPI is considered a more stable indicator of underlying inflation trends.

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