What does the producer price index measure? What is the meaning of PPI price index?

PPI is also known as the producer Price Index: The main purpose of the producer price index is measured by the price change in various products in different production stages.

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In general, the production of goods is divided into three phases: First, the completion stage: The goods will no longer do any processing procedures; Second, the middle stage: the goods need further processing; three, the original stage: the goods have not been made processing.

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PPI is an index that measures the current change trend and changes in industrial enterprises' products, which reflects important economic indicators in the production area in a certain period, and is also an important basis for the development of economic policies and national economic accounting. At present, my country's PPI survey products have more than 4,000 (more than 9,500 specifications), covering all 39 industrial industries, involving 186 investigations.

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According to the rules of price conduction, PPI has a certain impact on the CPI. PPI reflects the price level of the production link, and the CPI reflects the price level of the consumption link. The fluctuations in the overall price level are usually first appeared in the production area, and then spread through the industrial chain to the downstream industry, and finally affect consumer goods. The industrial chain can be divided into two: First, the production of industrial products is the production of raw materials, the presence of raw materials → production materials → the conduction of living materials. The other is the production of agricultural products as raw materials, and there is agricultural production materials → agricultural products → food conduction. In China, in terms of the above two conduction paths, the second article, that is, agricultural products are fully conducted to food, and the rise in food prices since 2006 is the main factor in pulling CPI rising. However, the first, that is, the conduction of industrial products to CPI is basically invalid.

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Since the CPI includes not only consumer prices, including service prices, CPI and PPI are not strictly related to the statistical caliber, so the changes in CPI and PPIs are inconsistent. The CPI and PPI continues to depart from state, which does not meet the price conduction law. The main reason for fracture in price conduction is that the industrial market is in the buyer's market and the government's control of public goods prices.

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Under different market conditions, the industrial prices have two possible situations to the final consumer price: First, under the market conditions of the seller, the price of industrial products (such as electricity, water, coal and other energy, raw material prices) are ultimately It will be successfully conducted to the price of consumer goods; the second is to be in the buyer's market conditions, due to the big supply, industrial prices are difficult to pass to the price of consumer goods, companies need to digest the cost of rising rising through compression profits, and their results are middle and lower reaches The price is stable, and it may even continue to fall, and the profitability of the company is reduced. For companies that are difficult to digest cost, they may face bankruptcy. It can successfully complete the price of industrial products (mainly electricity, coal, water and other energy raw materials) mainly belong to government price adjustment. In the case of continuous rise in the upstream product price (PPI), companies can't successfully pass the upstream costs, enabling the final consumer price (CPI), will eventually lead to a reduction in corporate profits.

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The producer price index is one of the common indicators that measures inflation

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1. The GDP scale index measures the price of all products and services produced, while CPI only measures the price of products and services purchased by consumers. Therefore, the GDP flat reduction index measure is wider, and the CPI is narrow.

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2, the GDP scale index only includes products produced in China, and imported products are not reflected in the GDP scale index. But imports affect the CPI. So if the import volume of a country is large, it is more representative by CPI.

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3, CPI is calculated using a fixed basket product, while the GDP scale index allows a basket product to change with time when the GDP component changes. Therefore, the CPI is relatively lack of flexibility, and GDP changes are sensitive.

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For the people, PPIs are usually important indicators that observe inflation levels. Since food prices change due to seasonal changes, energy prices often have accident fluctuations, in order to more clearly reflect the price change of overall commodities, generally change the changes in food and energy prices, thus forming "core producer price index "Further, further observe the trend of inflation rate.