assignment

1. Producer Price Index MTH121

The Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output.

The prices included in the PPI are from the first commercial transaction for many products and some services.

Main publication structures

industry-based,

commodity-based

stage-of-processing-based

Other publication structures

Producer price indexes by durability of product

Special commodity groupings

Fabricated metal products

Construction materials

Selected textile mill products

Industry-based

The PPI publishes over 600 industry price indexes in combination with over 5,000 specific product line and product category sub-indexes.

Commodity-based

The PPI publishes over 2,000 commodity price indexes organized by type of product and end use.

Stage-of-processing based

The PPI publishes aggregate price indexes organized by commodity-based processing stage.

The three stages of processing include Finished Goods; Intermediate Materials, Supplies, and Components; and Crude Materials for Further Processing.

The Consumer Price Indexes (CPI) program produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services.

Differences in primary use

Differences in composition

Differences in the type

Differences in timing of prices collected

A primary use of thePPIis to deflate revenue streams in order to measure real growth in output.

A primary use of theCPIis to adjust income and expenditure streams for changes in the cost of living.

The average change in prices over time of domestically produced and consumed commodities.

The index is comprised of prices for both consumer goods and capital equipment, but excludes prices for services.

Weights for the finished goods are currently based on the value of shipments of products

The average change in prices over time of goods and services purchased for personal consumption by urban U.S. households.

The index is comprised solely of prices for consumer goods, thus it excludes prices for capital equipment.

CPI weights correspond to the Consumer Expenditure Survey

The price collected for an item included in the PPI is the revenue received by its producer.

Sales and excise taxes are not included in the producer price because they do not represent revenue to the producer.

The price collected for an item included in the CPI is the out-of-pocket expenditure by a consumer for the item.

Sales and excise taxes are included in the price because they are necessary expenditures by the consumer for the item.

The PPI uses primarily a mail survey, which is sent to respondents on a monthly basis.

Once revised, PPI indexes are considered final.

A new model is priced when the producer stops selling the previous model.

The CPI collects price quotes by telephone or personal visits by BLS representatives.

CPI does not routinely revise indexes.

Most items in the CPI are priced at the outlet until they are no longer available for sale

The Producer Price Index for Finished Goods rose 0.7 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This advance followed a 0.6-percent decline in February and a 1.4-percent increase in January. At the earlier stages of processing, prices received by manufacturers of intermediate goods climbed 0.6 percent in March and the crude goods index rose 3.2 percent. On an unadjusted basis, prices for finished goods advanced 6.0 percent for the 12 months ended March 2010, their largest year-over-year gain since an 8.8-percent rise in September 2008. (See table A.)

The Producer Price Index is expected to rise for the fourth straight month to 0.8 percent in October from a 0.4 percent increase in September.

Industrial production index is expected to show that activity improved to 0.30 percent in October, after falling for the first time in a year to 0.2 percent in September.

The PPI tracks price change for practically the entire output of domestic goods-producing sectors: agriculture, forestry, fisheries, mining, scrap, and manufacturing.

In recent years, the PPI has extended coverage to many of the non-goods producing sectors of the economy, including transportation, retail trade, insurance, real estate, health, legal, and professional services.

The PPI continues to increase coverage of several other non-goods producing sectors of the economy. New PPIs are gradually being introduced for the products of industries in the utilities, finance, business services, and construction sectors of the economy.

http://www.bls.gov/ppi/ppiover.htm

http://en.wikipedia.org/wiki/Producer_price_index

http://www.forecasts.org/ppi.htm

http://research.stlouisfed.org/fred2/series/PPIACO

http://www.investopedia.com/university/releases/ppi.asp

http://www.bls.gov/ppi/ppicpippi.htm

http://www.bls.gov/dolfaq/bls_ques16.htm

http://www.businessinsider.com/ppi-march-rise-2010-4