Producers price index (PPI)

The PPI measures changes in prices of outputs that generate operating income and inputs that incur operating expense. It measures changes in prices for the supply (output) and use (inputs) of goods and/or services by the productive sector. The PPI therefore does not include prices for items related to capitalised expenditure, non-operating income, financing costs, and employee compensation. It does not cover depreciation, or income related to property ownership when this is not the normal source of operating income.

The PPI is made up of multiple price sub-indexes, each having a 'basket' of goods and services. The basket details what is priced and what weight is attached to each price for calculating a composite index. We weight each sub-index of the PPI to represent its share of the higher-level index.

The PPI differs from the consumers price index (CPI). The CPI shows the overall price-level change for goods and services acquired by the household sector for consumption, while the PPI measures prices relevant to the productive sector in terms of supply and use. The productive sector is generally made up of institutions that are not households (eg farms, sole proprietors, partnerships, corporations, cooperatives, government, and non-government organisations).