PPI (Producer Price Index)

PPI measures inflation at the wholesale level — the prices producers (factories, manufacturers, farms) charge for their goods. It comes BEFORE CPI in the supply chain, so it's a leading indicator of consumer inflation. If producers are paying more for inputs and charging more for outputs, those prices eventually flow through to consumers and show up in CPI a few months later. The headline PPI gets the attention, but pros watch "core PPI" (excluding food and energy) for the cleaner signal. Energy prices are too volatile to give a reliable inflation read on their own. Core PPI is what the Fed actually pays attention to when assessing inflation pressure. PPI is released monthly in the US, typically a day or two before CPI. It often pre-positions traders for the bigger CPI move — a strong PPI usually means a strong CPI is coming, and the dollar tends to rally accordingly.