US Producer Price Index

The Producer Price Index measures the average change in selling prices received by domestic producers, from farmers and miners to manufacturers, wholesalers and service providers. The headline most calendars show is final demand, which covers goods, services and construction sold for personal consumption, investment, government and export. The core version excludes food and energy; the BLS also publishes a narrower measure that strips out trade services.

It is sometimes described as a leading indicator for consumer inflation on the theory that producers pass costs on. That relationship has historically been loose. Today much of the market's interest lies in specific components that flow directly into the PCE price index, such as airfares, medical services and portfolio-management fees. Economists translate these within minutes into estimates of core PCE, and it is that translation, more than the headline PPI, that tends to move yields and the dollar.

Trade services, which capture changes in retail and wholesale margins, can swing wildly and dominate a month's result without saying much about underlying inflation. Energy adds further volatility. Unlike CPI, PPI is revised: data for four months after publication are subject to update as late reports come in.

PPI's position in the calendar matters. Released close to CPI, it is often the last major price input before the PCE report, which means it can confirm or overturn conclusions drawn from consumer prices. Import prices and the ISM prices-paid indexes round out the view of pipeline pressure.