Market importance: High importance.
Meaning: This indicator can reveal many important economic activity signs by comparing it with the consumer price index.
Release time: Two weeks after the end of the reporting month, 8:30 a.m. Eastern Time.
Frequency: Once a month.
Coverage period: The month just ended.
Revision situation: Monthly data is revised every four months.
The producer price index is a measure of the prices of goods sold by manufacturers and clothing makers to the business sector. It mainly reflects the price changes of production materials and is used to measure the cost price changes of various goods at different stages of production.
Generally, the statistical department collects the quotation data of various products from major producers and then converts them into percentages for easy comparison.
For example, China had constant prices in 1980 and 1990, and the United States used the index in 1967 as 100 for comparison. The indicator is published monthly by the Department of Labor, and has a great impact on the future (usually after 3 months) price level rise or fall, and is also a sign of the future market overall price trend.
From the perspective of economic operation and production process, the producer price index is a leading indicator of inflation.
When the prices of raw materials and semi-finished products rise, a few months later, they will be reflected in the prices of consumer products, and then cause the overall price level to rise, leading to inflation.
On the contrary, when the index falls, that is, the prices of production materials have a downward trend in the production process, it will also affect the overall price level to fall, reducing the pressure of inflation.
However, because the data does not include some commercial discounts, it cannot fully reflect the real price increase speed, sometimes resulting in exaggerated effects.
In addition, because agricultural products vary with the seasons, and energy prices also fluctuate periodically, they have a great impact on the price index, so when using this indicator, it must be sorted or removed for food and energy prices before analysis.
Because this indicator is also a key indicator related to inflation, traders in the foreign exchange market pay close attention to this indicator.
If the producer price index is higher than expected, there is a possibility of inflation, and the central bank may implement a tight monetary policy, which will have a positive impact on the currency of the country. If the producer price index falls, it will have the opposite effect.