Belle

My Econ 101 class gave me a low-level understanding of the overall economy. Which, you may surmise, is almost nothing, so it puts on par with what Trump has in his tiny little pea-sized brain.

And it was 55 years ago, when they were still trying to figure out if it was OK that we'd been fully moved off the gold standard. 

So from what I can piece together:

• Producer Price Index (PPI) is a kind of "leading indicator" (ie: Prospective) because it hints at what we can expect to see at the grocery store.
• Consumer Price Index (CPI) is more or less a "lagging indicator" (ie: Retrospective) because it tells us what actually happened at the grocery store.

The two indices measure different - though very much related - aspects of the economy.

Producer Price Index (PPI)

• What it tracks: Wholesale prices received by domestic producers for their output.
• What is inside: Raw materials, intermediate goods, machinery, and exports.
• Taxes: Excludes sales and excise taxes because they are not revenue for the producer.Main use: To measure real output growth and act as an early sign of future consumer inflation.

Consumer Price Index (CPI)

• What it tracks: Retail prices paid by typical urban households.
• What is inside: Finished goods, services, housing/rent, medical care, and imports.
• Taxes: Includes sales and excise taxes because consumers pay them.Main use: To measure changes in the cost of living.