Producer Price Index

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The Producer Price Index (PPI) looks at the average change in selling prices from the viewpoint of domestic producers of both goods and services. Three areas of production are observed: industry-based, commodity-based and commodity-based final demand-intermediate demand. Investors look to the producer price index, which is a more relevant way of gauging inflation than CPI because of the large basket of producers (100,000 price points) that Bureau of Labor Statistics uses as a data pool for their calculations.

In September, PPI increased 0.4% to 198.5, a 1.8% increase from one year ago. Core PPI, which excludes volatile categories like food and energy, is up only 1.1% from one year ago.

The sharp monthly PPI increase can be largely attributed to the 7.3% increase in gas prices. Therefore, we do not see any significant upward pricing pressures coming from producers.  This would indicate stable pricing moving forward.