| Definition |
Measures the average change over time in the prices paid by consumers for goods and services. |
Measures the average change over time in the prices received by producers for their output. |
| Focus |
Consumer-level prices (retail level). |
Producer-level prices (wholesale or factory gate level). |
| Who Pays |
End consumers of goods and services. |
Businesses and industries before goods reach consumers. |
| Includes |
Food, housing, clothing, healthcare, education, transportation, etc. |
Raw materials, intermediate goods, and finished goods at the producer level. |
| Use |
To assess cost of living and guide wage, pension, and monetary policy adjustments. |
To gauge inflation pressure from the production side and help forecast CPI trends. |
| Impact on Public |
Direct impact; reflects consumer inflation. |
Indirect impact; may influence consumer prices over time. |
| Timing |
Often lags behind PPI in showing price changes. |
Acts as a leading indicator for future consumer inflation. |
| Volatility |
Generally less volatile due to diversified basket. |
More volatile, especially affected by commodity prices. |
| Reported By |
Statistical agencies like the Bureau of Labor Statistics (BLS) or national counterparts. |
Same agencies; compiled from producer data and surveys. |
| Adjustment |
Used to adjust social benefits, wages, and tax brackets. |
Used to analyze inflation at earlier production stages. |
| Index Base |
Typically uses a base year for consumer prices (100 index point scale). |
Similarly indexed to a base year for producer prices. |
| Market Reaction |
Closely watched by policymakers and markets as a key inflation metric. |
Monitored for early signs of inflation before it reaches consumers. |
| Frequency |
Usually released monthly. |
Usually released monthly. |
CPI vs PPI