Inflation, CPI and the PPI

By Staff Reporters


DEFINITION: In finance, inflation is a general increase in prices of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.


DEFINITION: The Producer Price Index PPI is a group of indexes that measure the change, over time, in the prices received by domestic producers of goods and services. It measures price changes from the perspective of the seller rather than the consumer, as with the CPI. The CPI would include imported goods, while the PPI is relevant to U.S. producers, and therefore would not include imports.


The PPI measures over 10,000 products and services. It reports the price changes prior to the retail level. This information is useful to the government in formulating fiscal and monetary policies. The data gathered from the PPI is often used in escalating purchase and sales contracts. That is the dollar amount to be paid at some time in the future.



Inflation stayed elevated in April but eased off its 40-year high, signaling that a stomach-churning surge in consumer prices since last summer may have peaked.

PPI April 2022:

The consumer price index increased 8.3% annually, down from 8.5% in March, as a drop in gasoline prices offset a continuing run-up in food, rent and other costs, the Labor Department said Wednesday. March’s yearly advance marked the fastest since December 1981.


2nd Opinions:




One Response

  1. CPI

    Yesterday’s report showed that consumer prices continued their upward march last month. The hotter-than-forecast data indicates that the Fed’s aggressive interest rate hikes have not led to lower inflation just yet, and that even when the rate hikes do kick in, it’s going to be a long slog back to normal inflation levels.

    The headline number from the report was the 0.6% monthly increase in core CPI, which is considered a more accurate picture of inflation because it doesn’t include volatile food and gas prices. That 0.6% bump is worryingly high, and matches the same jump from August. The annual core CPI figure of 6.6% was the biggest jump in 40 years.


    Liked by 1 person

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