The Producer Price Index, which will be released at 8:30 a.m. Eastern today, June 13, 2024, has been described as a pre-indicator of inflation. (Overall, as prices rise for domestic producers, these are expected to be passed on to consumers.)
According to the US Bureau of Labor Statistics, the producer price index has a different composition than the consumer price index released yesterday, June 12, 2024.
The BLS explained that one difference is that "the CPI includes within its scope goods and services purchased by domestic consumers and therefore includes imports. "
The BLS added:
"The PPI, in contrast, does not include imports, because imports are by definition not produced by domestic firms.
Imports compose a substantial portion of the CPI, especially within the apparel and new-cars component, and their inclusion in the CPI and exclusion in the PPI for personal consumption causes a substantial difference between the two indexes.
A final difference in scope between the PPI and the CPI occurs for services whose prices contain an interest rate component. The CPI’s scope excludes changes in interest rates or interest costs. The scope of the CPI includes services, such as banking services and insurance services, whose prices have an interest rate component, but the interest rate component of these services is not included in the index.
The scope of the PPI also encompasses services whose prices include an interest rate component, but this index includes the interest rate component of those prices. Banking services account for approximately 4 percent of the PPI for personal consumption, and insurance services compose 3.8 percent. Within the PPI, changes in interest rates will affect price indexes for banking and insurance. The scope of the CPI includes some banking services, such as ATM fees, and many insurance services; however, the interest rate component of these services is not included. Changes in interest rates therefore do not affect the CPI."
Another useful summary is provided by Investopedia below:
