What does the PPI (Producer Price Index) measure?
A. Retail prices for consumers
B. Prices of government spending
C. Prices producers receive for goods and services
D. Foreign exchange rates
Answer (2)
The correct answer is letter C. Prices producers receive for goods and servicesThe Producer Price Index (PPI) tracks the prices that businesses and manufacturers receive when they sell their goods, before these goods reach consumers. It measures price changes from the perspective of the seller rather than the buyer.If the PPI increases, it often means the cost to produce goods is going up. Later, those higher costs may be passed on to consumers, which is why PPI can predict upcoming inflation in consumer prices.In the Philippines, if the cost of raw sugar for manufacturers rises, the PPI will reflect that change before we see price increases in soft drinks or baked goods in supermarkets. That’s why governments watch PPI to anticipate future movements in the CPI.
The correct answer is C. Prices producers receive for goods and services.The Producer Price Index (PPI) measures the average change over time in the selling prices that domestic producers receive for their output. It tracks price changes from the perspective of the seller or producer, not the consumer. It is used to gauge inflation at the wholesale level before it reaches consumers.
