Producer price index: One way to measure the health of key industrial markets

What the producer price index is and what it does and doesn’t tell us

The broader energy and industrial sector is largely built around commodity markets like those for crude oil, natural gas, chemicals, metals, and pulp & paper.

Understanding the supply, demand, and pricing dynamics across these commodity markets is an important step in analyzing the energy sector.

Fortunately for us, the US Bureau of Labor Statistics helps us a great deal by publishing a series of truly fascinating data sets collectively known as the Producer Price Index (PPI).

Image created by Google Gemini via the prompt “a store shelf filled with key energy and industrial commodities like crude oil, industrial chemicals, metals, and pulp & paper”

In this post, we’ll talk about what the PPI actually is, and how it differs from the much more widely discussed Consumer Price Index (CPI), a key measure of inflation.

We’ll give examples of some of the most commonly followed PPI instances, showing how these indices have trended since 2000.

We’ll also make sure to discuss what these PPIs tell us about each sector, demonstrating just how much we can learn from this one easy-to-understand and accessible metric.

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What is the producer price index (PPI)? And how does it compare to the consumer price index (CPI)?