Producer Prices (PPI)

PPI is the inflation pipeline — what producers are paying for inputs and what they're charging for finished goods, before any of it reaches the consumer-side CPI / PCE numbers. PPI Final Demand specifically captures goods and services in their final form (the stage before retail markup), so it's the input most directly comparable to consumer inflation and tends to lead CPI by one to three months. Rising PPI typically forecasts rising CPI as producers pass costs through; falling PPI gives the Fed early evidence that the pressure is genuinely abating. The card is rated against PPI's own historical distribution rather than the 2% policy band used by Core CPI and Core PCE — PPI has no explicit Fed target and is structurally more volatile (food, energy, and trade services swing harder than the consumer basket), so a fixed band would whipsaw on every print. Useful watch zones to keep in mind: readings near the historical mean (~2-3%) are unremarkable; a swing above mean + 1σ usually means a real cost-push event the consumer side is about to feel; sustained negative readings (deflationary at the producer level) have coincided with the deepest demand-side slowdowns. Pair with Core PCE and Core CPI to see whether producer pressure is feeding through to the consumer-facing measures the Fed actually targets, and with 5Y5Y Forward Inflation to see whether the bond market believes any pipeline pressure will be persistent. One note on history: BLS introduced the modern PPI Final Demand framework in January 2014, with historical data backfilled to November 2009 (the index reference base), so the post-2009 portion of the chart is what news outlets and Fed speeches mean today when they say "PPI." Pre-2009 readings use PPI Finished Goods (the headline series BLS used from 1947 through the 2014 transition) as a continuation, so the chart has the regime context — 1970s stagflation, the Volcker disinflation, the 2008 commodity bust — that 15 years of Final Demand history alone can't provide. The two series cover overlapping baskets (Final Demand adds services and construction on top of the goods that Finished Goods tracked) and their YoY % change behavior overlaps closely in their shared 2009-present window, so the chained reading is conceptually continuous even though the underlying baskets aren't identical.