Producer Price Index (PPI)
The Producer Price Index (PPI) for food measures changes in prices paid to domestic producers for their output. The PPI is similar to the CPI in that it measures price changes over time and is a natural extension of ERS's work with the CPI for food. ERS regularly updates farm and wholesale food price forecasts for the short-term period.
Data is collected for nearly every industry in the goods-producing sector of the economy. Of particular interest to the food sector are indexes for farm products and processed foodstuffs and feedstuffs.
Changes in PPIs, particularly the stage-of-processing indexes, are often an early indicator of retail food price inflation for related CPIs in the U.S. economy. For this reason, the PPI is closely followed by industry analysts, food market participants, and policymakers. Forecasting estimates for farm and wholesale groups are essential, not only to recognize and predict farm and wholesale food prices, but also to understand retail food prices.
ERS's analysis of the PPI consists of:
- Reporting the current index level for farm level, wholesale level, and stage-of-processing foodstuffs and feedstuffs;
- Examining changes in the PPI for farm- and wholesale-level food; and
- Constructing forecasts of the PPI for farm- and wholesale-level food for the next 12-18 months.