Changes in the consumer price index are useful in predicting changes in the producer price index.

Question

Quizplus · Accepted Answer

The Consumer Price Index (CPI) and Producer Price Index (PPI) measure different sets of prices at different points in the supply chain. Changes in CPI, which measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services, do not necessarily predict changes in PPI, which measures the average change over time in the selling prices received by domestic producers for their output. The two can move independently due to factors like changes in production costs, profit margins, and supply chain dynamics.

Changes in the Consumer Price Index Are Useful in Predicting