Producer Price Index - August 2026

General Description

The Producer Price Index is created from pricing information collected directly from domestic producers within the goods, services, and construction sectors of the economy. Companies provide their pricing information through a monthly survey via the internet.

Glossary

• Final demand (PPI)

  Portion of the Final Demand-Intermediate demand (FD-ID) system that measures price changes from the perspective of the producer. It covers products sold for personal consumption by consumers, for capital investment by businesses, for government purchase, or for export.

  Note: The final demand portion of the FD-ID system is composed of three main price indexes: final demand goods, final demand services, and final demand construction.

• Intermediate demand

  Portion of the Final Demand-Intermediate Demand (FD-ID) system that tracks price changes, from a producer's perspective, of goods, services, and construction products sold to businesses as inputs to production, excluding capital investment.

  Note: The FD-ID system includes two parallel treatments of intermediate demand. The first treatment organizes intermediate demand commodities by type and is composed of three main price indexes: processed and unprocessed goods for intermediate demand, services for intermediate demand, and intermediate demand construction. The second treatment organizes intermediate demand commodities into production stages, with the explicit goal of developing a forward-flow model of production and price change.

  See the video, “Introduction to the Producer Price Index.”

• Inflation

  Rising prices of goods and services over time.

  Note: When inflation occurs, the purchasing power of money declines. For example, if the inflation rate is 2 percent annually, then, theoretically, a $1 basket of apples will cost $1.02 in a year.

  See contract escalation.

QUESTIONS AND ANSWERS

1. What is the Producer Price Index (PPI)?

   The Producer Price Index is a family of indexes that measures the average change over time in the selling prices received by domestic producers of goods and services. Products produced in the 50 U.S. states and the District of Columbia are eligible for inclusion in the PPI. The PPI excludes products produced in U.S. territories. PPIs measure price change from the perspective of the seller. This contrasts with other measures, such as the Consumer Price Index (CPI), that measure price change from the purchaser's perspective.

   About 10,000 PPIs for individual products and groups of products are released each month. PPIs are available for the output of nearly all industries in the goods-producing sectors of the U.S. economy—mining, manufacturing, agriculture, fishing, and forestry—as well as natural gas distribution, electricity distribution, construction, and goods competitive with those made in the producing sectors, such as waste and scrap materials. The PPI program covers approximately 69 percent of the service sector's output, as measured by revenue reported in the 2017 Economic Census.

2. How are Producer Price Indexes calculated?

   The formula used to calculate PPIs is a modified Laspeyres index. The Laspeyres index compares the base period revenue for a set of products to the current period revenue for the same set of products.

   The following formula closely approximates the actual computation procedure:
   
   Where: is the price of a commodity in the base period;
   is the price of a commodity in the current period; and
   is the quantity of the commodity shipped during the base period.

   In this form, the index is the weighted average of price relatives (price ratios for each item. The expression represents the weights in value form.

3. Are Producer Price Indexes subject to change after being published?

   Yes. After an index is first published, it is subject to recalculation to take into account late survey reports and corrections by respondents. Every index is recalculated on a monthly basis— up to 4 months after initially released. In addition, previously published seasonally adjusted indexes are subject to change in January when new seasonal factors are calculated and applied to the most recent 5 years of data.

4. When are Producer Price Index (PPI) data made available?

   PPIs are published monthly. First-published data for a particular month, as well as recalculated indexes (final figures) for the indexes published four months earlier, are available the following month of reference, usually during the second full week. For example, on August 14, 2013, first-published PPIs for July 2013 and final indexes for March 2013 were released. In September 2013, first-published indexes for August and recalculated figures for April were released. Data are posted shortly after 8:30 a.m. on dates as announced in the online release calendar.

5. What does the Final Demand-Intermediate Demand system measure?

   The final demand portion of the FD-ID system measures price changes from the producer perspective for commodities sold as personal consumption, capital investment, to government, and as exports. The system is composed of six main price indexes: final demand goods; final demand trade services; final demand transportation and warehousing services; final demand services excluding trade, transportation, and warehousing; final demand construction; and overall final demand.

   The intermediate demand portion of the FD-ID system tracks price changes from a producer perspective for goods, services, and construction products sold to businesses as inputs to production, excluding capital investment. The system includes two parallel treatments of intermediate demand. The first treatment organizes intermediate demand commodities by type and is composed of six main price indexes: unprocessed goods for intermediate demand; processed goods for intermediate demand; intermediate demand trade services; intermediate demand transportation and warehousing services; intermediate demand services less trade, transportation, and warehousing; and intermediate demand construction. The second treatment organizes intermediate demand commodities into production stages, with the explicit goal of developing a forward-flow model of production and price change. These indexes can be used to study price transmission across stages of production and final demand. This system is constructed in a manner that maximizes forward flow of production between stages, while minimizing back-flow of production. The production flow treatment contains four main indexes: intermediate demand stage 1, intermediate demand stage 2, intermediate demand stage 3, and intermediate demand stage 4.

   FD-ID indexes are constructed from commodity-based producer output price indexes. These commodity-based output price indexes are allocated to aggregate categories based on proportions of use by type of buyer. The main source of data used to determine buyer type is the table titled "Use of commodities by industries, before redefinition" from the Benchmark Input-Output Data Tables of the United States, produced by the U.S. Bureau of Economic Analysis (BEA). The two primary classes of buyers included in the FD-ID system are final demand (personal consumption, capital investment, government, export) and intermediate demand (business purchases, excluding capital investment). In many cases, the same commodity is purchased by different buyer types, so commodities are often included in several FD-ID indexes. For example, regular gasoline is purchased for personal consumption, export, government use, and business use. The PPI program publishes only one commodity index for regular gasoline, reflecting sales to all types of buyers. It is this index that is used in all FD-ID aggregations, regardless of whether the gasoline is sold for personal consumption, as an export, to government, or to businesses, with differences accounted for in the applicable weights to each aggregate FD or ID index. In some cases, buyer type is an important price determining characteristic, and results in commodity indexes being created on that basis. For example, within the PPI category for loan services, separate indexes for consumer loans and business loans were constructed. In this case, the commodity index for consumer loans would be included in the final demand index and the commodity index for business loans would fall under intermediate demand.

   Weights for commodity components of the FD-ID indexes can be found in the Relative Importance Tables section of the PPI homepage.

   Also on the PPI website, you may find a Summary of the FD-ID system. For a detailed explanation relating to the construction of the FD-ID system, see "A new, experimental system of indexes from the PPI program" (PDF) in the February 2011 Monthly Labor Review, or visit the FD-ID Aggregation system web page. More detail is available in PPI section of the BLS Handbook of Methods.

Technical Information

• Handbook of Methods
• Technical Note
• Final Demand - Intermediate Demand Information
• Archived PPI News Releases