The producer price index is likely to respond more quickly to price changes than the other indexes, so it is regarded as a warning sign of inflation.

Question

Quizplus · Accepted Answer

The producer price index measures the change over time in the prices received by producers for the sale of goods and services. As it reflects the prices at the production level, it is likely to respond more quickly to changes in input costs, such as raw materials, energy, and labor. Therefore, the producer price index can provide an early indication of inflationary pressures in the economy.

The Producer Price Index Is Likely to Respond More Quickly