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The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. This contrasts with other measures, such as the Consumer Price Index (CPI), that measure price change from the purchaser's perspective. Sellers' and purchasers' prices may differ due to government subsidies, sales and excise taxes, and distribution costs.
The producer price indexes is obtained through the systematic sampling of industries. In the mining and manufacturing sectors, price information from virtually every industry is captured. By contrast, although PPI coverage of the service sector of the economy is substantial (more than 70 percent), it remains incomplete. The PPI program also includes data that track other sectors of the economy: agriculture, fishing, forestry, utilities (natural gas and electricity), and construction. As of January 2014, the PPI program included the following indexes:
Price indexes for approximately 535 mining, forestry, utility, construction, manufacturing, and services industries; over 500 indexes for groupings of industries; and more than 4,000 indexes for specific within-industry product and service categories;
More than 3,700 commodity price indexes for goods and about 800 for services (seasonally adjusted and not seasonally adjusted), organized by product, service, and end use;
Over 600 indexes for aggregate measures of price change, including the aggregation system for final demand–intermediate demand (FD–ID).
Together, these elements constitute a system of price measures designed to meet the need for both aggregate information and detailed applications, such as following price trends for specific industries and products, as well as the need for tracking price movements at a more aggregated level relative to the overall economy.
The PPI universe consists of the output of all industries in the goods-producing sectors of the U.S. economy—mining, manufacturing, agriculture, fishing, and forestry—as well as the output of the natural gas, electricity, and construction industries. Recycled goods that compete with those made in the goods-producing sectors, such as waste and scrap materials, also are outputs that are part of the survey. Imports no longer are included within the PPI universe; however, the BLS International Price Program publishes price indexes for both imports and exports. (See chapter 15.) Goods shipped between establishments owned by the same company (termed interplant or intracompany transfers) are included, as is a substantial percentage of the domestic production of goods specifically made for the military.
There are three main PPI classification structures which draw from the same pool of price information provided to the BLS by cooperating company reporters:
Annual revisions are usually made to the seasonally adjusted data for the preceding five years. Revisions are typically released in Februrary (two business days prior to the release of January data).
Major revisions are made every ten years as part of comprehensive benchmarking.