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July 1996

Effect of 1992 weights on Producer Price Indexes

Scott Sager

Updated weights reflecting 1992 values of shipments of commodities resulted in increasing relative importance for food at all stages of processing, for energy at the finished and intermediate stages, and for basic industrial materials at the crude stage. Because production patterns are influenced by factors other than price changes such as technological advancement and changes in demand, it is necessary to periodically restore the representativeness of the mix of goods that go into the PPI. This article describes the impact that updating the weights of items has had on producer price indexes.

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