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February 2011, Vol. 134, No. 2
A new, experimental system of indexes from the PPI program
Jonathan C. Weinhagen
Jonathan C. Weinhagen is an economist in the Office of Prices and Living Conditions at the Bureau of Labor Statistics. E-mail: email@example.com.
This month, the PPI program is releasing data from a new, experimental system of indexes; the new system covers more commodities and more portions of final demand than the stage-of-processing system, and also contains two different treatments of intermediate demand.
In its monthly news releases of Producer Price Index (PPI) data, the Bureau of Labor Statistics currently highlights the stage-of-processing (SOP) system as its key structure for analyzing producer prices. The SOP system aggregates price indexes for processed and unprocessed goods. Over the past 20 years, PPI coverage has expanded to include price indexes for many service and construction activities, but the SOP system continues to include only goods. The PPI program recently developed an experimental aggregation system that includes goods price indexes as well as service and construction price indexes for products sold to all portions of final demand (personal consumption, capital investment, government use, and export) and to intermediate demand (business inputs, excluding capital investment). The experimental aggregation system was introduced with the release of January 2011 data in February 2011. This article presents the new, experimental index aggregation system.
The next section of the article provides an overview of the current SOP system. The section after that explains the development of the experimental aggregation system. After that, the article describes the price indexes for final demand included in the system and then discusses the intermediate demand price indexes that are included. The system contains two different sets of intermediate demand price indexes. The first set is price indexes for intermediate-demand goods, services, and construction commodities organized according to type of commodity. The second set is intermediate demand price indexes classified into stages that are based on the flow of production; these indexes can be used for price-transmission analysis. The final section of the article is a summary.
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