Rapidly rising producer prices could hurt the economy
Producer Price Index (PPI) inflation is currently outpacing Consumer Price Index (CPI) inflation, raising concerns about potential economic strain. Economists note that the two indexes track different components, with PPI being more sensitive to energy costs.
Why it matters
Discrepancies between wholesale and retail inflation can signal underlying economic imbalances that may impact future monetary policy and consumer purchasing power.
What happens with the producer price index often impacts the consumer price index.
Listen Now Save Share Download The producer price index is climbing faster than the consumer price index, which could cause problems for the economy. Spencer Platt/Getty Images A whole bunch of inflation data comes out this week, because the Bureau of Labor Statistics puts out its inflation reports in pairs: the consumer price index, followed by the producer price index.
The CPI is easy to understand: It measures how much consumers are paying for stuff.
PPI is a little more complex. It’s often described as "inflation at the wholesale level." But that's only part of the story, because it measures inflation in the prices that businesses are charging all buyers — whether it's other businesses or consumers.
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