<\/span>Some History<\/span><\/h2>
The necessity to track indices<\/a> appeared as early as the 20th century. In 1925, at the International Conference of Labor Statisticians, certain rules of data collection, processing, generalizing, and presenting were adopted. The importance of such information was acknowledged by all the participants of the conference.<\/p>
Also, at the Conference, a universal approach to planning and regulating price policies of countries was worked out. Practically, these were the first steps towards globalizing international markets.<\/p>
The standards created that time were revised three times later: in 1947, 1962, and 1987. In 1962, at the tenth Conference, the term PPI was finally adopted. This is exactly the term used today.<\/p>

<\/span>PPI vs CPI<\/span><\/h2>
The CPI (Consumer Price Index) is an instrument representing changes for goods and services prices at the final consumer’s side over a certain period. These data is normally used by Central Banks to make interest rate<\/a> decisions.<\/p>
When inflation grows, interest rates on loans start being increased in cycles, and when inflation slows down, they start being decreased the same way.<\/p>
The PPI (Producer Price Index), in turn, reflects changes in goods prices at the wholesale stage, i.e. at the manufacturer’s end. The producer price practically demonstrates the whole range of spending, from buying crude materials through its processing, expenses on energy carriers, expenses on logistics, and to the final product.<\/p>
As a result, producer prices start changing a bit earlier than at the consumer’s end. This allows calling this index a leading one, signaling about the future inflation level.<\/p>
For example, if prices are growing at the wholesale level, this is likely to reflect in some growth at the consumer level over some time. This can make the CPI grow.<\/p>
However, keep in mind that:<\/p>
The manufacturer may not always run to increasing wholesale prices due to an increase in the cost price because competition might be high, so the manufacturer fears losing their part of the market.<\/li><\/ul>
In such cases, the manufacturer starts looking for ways to make up for additional costs by other expenses.<\/p>
With retail sales, it is the same. Stores are also unwilling to increase final prices because this might scare off buyers. There, they also try to save up but keep prices without changes.<\/li><\/ul>\n
The table puts the two inflation indicators<\/a> side by side.<\/p>\n
\n \n \n
Parameter<\/th> PPI, producer price index<\/th> CPI, consumer price index<\/th><\/tr><\/thead>\n
What it measures<\/td> Prices producers receive for their goods and services<\/td> Prices consumers pay for a basket of goods and services<\/td><\/tr>\n
Place in the price chain<\/td> Earlier: cost changes appear here first<\/td> Later: shows what has reached shop prices<\/td><\/tr>\n
US release<\/td> Monthly, mid-month, 8:30 AM New York time<\/td> Monthly, mid-month, 8:30 AM New York time<\/td><\/tr>\n
Core version<\/td> Excludes food, energy and trade services<\/td> Excludes food and energy<\/td><\/tr>\n
Weight in rate decisions<\/td> Secondary, read as an early signal<\/td> Primary inflation gauge<\/td><\/tr>\n
Market reaction<\/td> Moderate, stronger when it points the same way as the next CPI<\/td> Strong, one of the most volatile releases of the month<\/td><\/tr>\n <\/tbody>\n <\/table>\n <\/div>\n
<\/span>What the PPI Includes<\/span><\/h2>\n
The headline US figure is the PPI for final demand, published by the Bureau of Labor Statistics. It tracks the selling prices of goods, services and construction sold to their final users, and services make up about two thirds of it.<\/p>\n
\n
Goods:<\/strong> food, energy such as fuel and electricity, and core goods, from cars to clothing.<\/li>\n
Services:<\/strong> trade services, meaning the margins of wholesalers and retailers, transportation and warehousing, and other services such as banking and healthcare.<\/li>\n
Construction:<\/strong> a small share of the index.<\/li>\n <\/ul>\n
Food and energy prices swing with harvests and oil, and trade margins move with retailers' pricing decisions, so a single month's headline PPI can jump for reasons that say little about the trend. That is why the BLS also publishes core PPI, final demand excluding food, energy and trade services. When headline PPI rises but core PPI stays flat, the jump usually came from oil or food. When core PPI rises too, the price pressure is broad, and markets take it more seriously.<\/p>\n
Other countries publish their own versions. The UK splits producer prices into input prices, what manufacturers pay for materials and fuel, and output prices, what they charge for their products.<\/p>\n
<\/span>Where to Find the PPI?<\/span><\/h2>
PPI values are calculated and published monthly. Every country has a national institution that cares for it.<\/p>
For example, in the USA, the index is calculated by the Bureau of Labor Statistics, and in Britain by the Office for National Statistics.<\/p>
You can find the current, previous, and forecast PPI values in the RoboForex Economic calendar<\/a>.<\/p>\n
In the US, the BLS releases the PPI for the previous month around the middle of each month, usually within a day or two of the CPI, at 8:30 AM New York time. That is 12:30 UTC while the US is on summer time and 13:30 UTC in winter. The release gives the change against the previous month and against the same month a year earlier, for both headline and core PPI. The UK publishes producer prices together with its CPI at 7:00 AM UK time, and the eurozone publishes industrial producer prices at the start of each month.<\/p>\n
The RoboForex economic calendar<\/a> lists every release with its time, the previous value and the analysts' forecast. Check the forecast before the release: the market reacts to the gap<\/a> between the forecast and the actual figure.<\/p>\n\n
<\/span>How PPI Affects Currencies, Gold and Indices<\/span><\/h2>\n
Currencies.<\/strong> A PPI above the forecast points to higher consumer inflation ahead, so traders expect the central bank to keep rates high or raise them, and the currency usually strengthens. A PPI below the forecast works the other way. The reaction is strongest in the currency of the country that published the report: US PPI moves EUR\/USD<\/a>, GBP\/USD<\/a> and USD\/JPY<\/a>, UK PPI moves GBP pairs, as the two examples below show.<\/p>\n
Gold<\/a>.<\/strong> Gold is priced in US dollars and pays no interest, so it tends to fall when US PPI beats the forecast: the dollar and bond yields rise, and holding gold becomes less attractive. A weak PPI often supports XAU\/USD for the same reason in reverse.<\/p>\n
Stock indices.<\/strong> Rising producer prices raise companies' costs and make rate cuts less likely, so a strong PPI often weighs on indices such as the US 500. Companies that can pass costs on to customers cope best, which is why the reaction depends on the sector and on what the next CPI shows.<\/p>\n
PPI usually moves markets less than CPI. Its impact grows when it arrives a day before the CPI and hints at what that report will show, and when the core figure surprises together with the headline.<\/p>\n
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<\/span>How to Use the PPI in Trading<\/span><\/h2>
Take a look at some examples of using the index for trading in the currency market.<\/p>
Example 1<\/h3>
On September 10th, 2021, the USA published the new PPI value. It turned out to be 8.3% instead of 8.2% expected.<\/p>
In the USA, the PPI is published in three structures: by industry, by commodity, and by final and intermediate demand.<\/p>
If the index values exceed expectations, the market goes up (the USD is bullish); if otherwise, the USD becomes bearish.<\/p>
On the whole, you can trade such fundamental news using pending orders<\/a>. Even such a minor difference (just 0.1%) created a momentum<\/a>, so that the dollar grew, but never bothered other currencies.<\/p>
As a rule, waiting for such news, the market consolidates in narrow ranges. Try using M15 and M30.<\/p>
Choose the instrument in which it is easier to see the borders of the range, and place pending orders for breakaways of these borders.<\/p>
For example, let us look at the reaction of the euro to this news. Check the chart below:<\/p>
$\"EUR\/USD$ <\/a>
EUR\/USD chart when the PPI in the USA was published<\/em><\/figcaption><\/figure>
A pending selling order for a breakaway of 1.1818 downwards would have brought you a profit at 1.1777. This is the goal of the first wave of decline by the trend.<\/p>
A pending buying order was to be placed at a breakaway of 1.1855 upwards. But as soon as a selling order is triggered, cancel the buying one.<\/p>
Example 2<\/h3>
On September 15th, 2021, Britain followed up to publish the PPI. Instead of 0.4% forecast, it was 0.7% , and on the comments the Central Bank representatives said that 4 out of 8 committee members voted for an increase in the interest rate.<\/p>
Taken together, this made the market optimistic, and GBP\/USD<\/a> corrected the whole preceding wave of falling.<\/p>
The GBP reacted like the USD had done: if the index turns out above expectations, the market becomes bullish, and vice versa.<\/p>
As we can see at the GBP\/USD chart, on the day the PPI was published the market went steeply upwards, breaking through 1.3815 and corrected to 1.3853.<\/p>
$\"GBP\/USD$ <\/a>
GBP\/USD chart at the moment the British PPI was published<\/em><\/figcaption><\/figure><\/span>Summary<\/span><\/h2>
The CPI and PPI help traders anticipate the market's reaction to inflation data. However, before opening a position, try to check the signal on some technical indicator<\/a>. Also do not forget to limit your losses wisely.<\/p>
I recommend beginners try this out on demo account.<\/p>\n
\n Open a Trading Account with RoboForex<\/a>\n <\/div>\n\n
<\/span>FAQ<\/span><\/h2>\n
\n
\n
What is PPI in forex?<\/summary>\n
PPI, the producer price index, measures the prices producers receive for their goods and services. In forex it matters because it hints at future consumer inflation and therefore at interest rates: a PPI above the forecast usually strengthens the currency, and a reading below it usually weakens it.<\/div>\n <\/details>\n
\n
What is the difference between PPI and CPI?<\/summary>\n
PPI tracks the prices producers receive, and CPI tracks the prices consumers pay. Producer prices usually change first, so PPI works as an early signal, while CPI is the figure central banks rely on most when they set rates.<\/div>\n <\/details>\n
\n
Is a high PPI good for the dollar?<\/summary>\n
In the short term, a US PPI above the forecast usually supports the dollar, because traders expect the Fed to keep rates high. The effect is stronger when core PPI rises too and when the next CPI confirms the trend.<\/div>\n <\/details>\n
\n
What is core PPI?<\/summary>\n
Core PPI is the producer price index without its most volatile parts. In the US, the main core measure excludes food, energy and trade services. It shows the underlying price trend, so a surprise in core PPI often moves markets more than the headline figure.<\/div>\n <\/details>\n
\n
When is US PPI released?<\/summary>\n
The Bureau of Labor Statistics publishes US PPI once a month, around the middle of the month, at 8:30 AM New York time. The exact dates for the year, the previous value and the forecast are in the economic calendar.<\/div>\n <\/details>\n <\/div>\n

Parameter<\/th>	PPI, producer price index<\/th>	CPI, consumer price index<\/th><\/tr><\/thead>\n
What it measures<\/td>	Prices producers receive for their goods and services<\/td>	Prices consumers pay for a basket of goods and services<\/td><\/tr>\n
Place in the price chain<\/td>	Earlier: cost changes appear here first<\/td>	Later: shows what has reached shop prices<\/td><\/tr>\n
US release<\/td>	Monthly, mid-month, 8:30 AM New York time<\/td>	Monthly, mid-month, 8:30 AM New York time<\/td><\/tr>\n
Core version<\/td>	Excludes food, energy and trade services<\/td>	Excludes food and energy<\/td><\/tr>\n
Weight in rate decisions<\/td>	Secondary, read as an early signal<\/td>	Primary inflation gauge<\/td><\/tr>\n
Market reaction<\/td>	Moderate, stronger when it points the same way as the next CPI<\/td>	Strong, one of the most volatile releases of the month<\/td><\/tr>\n <\/tbody>\n <\/table>\n <\/div>\n <\/span>What the PPI Includes<\/span><\/h2>\n The headline US figure is the PPI for final demand, published by the Bureau of Labor Statistics. It tracks the selling prices of goods, services and construction sold to their final users, and services make up about two thirds of it.<\/p>\n \n Goods:<\/strong> food, energy such as fuel and electricity, and core goods, from cars to clothing.<\/li>\n Services:<\/strong> trade services, meaning the margins of wholesalers and retailers, transportation and warehousing, and other services such as banking and healthcare.<\/li>\n Construction:<\/strong> a small share of the index.<\/li>\n <\/ul>\n Food and energy prices swing with harvests and oil, and trade margins move with retailers' pricing decisions, so a single month's headline PPI can jump for reasons that say little about the trend. That is why the BLS also publishes core PPI, final demand excluding food, energy and trade services. When headline PPI rises but core PPI stays flat, the jump usually came from oil or food. When core PPI rises too, the price pressure is broad, and markets take it more seriously.<\/p>\n Other countries publish their own versions. The UK splits producer prices into input prices, what manufacturers pay for materials and fuel, and output prices, what they charge for their products.<\/p>\n <\/span>Where to Find the PPI?<\/span><\/h2> PPI values are calculated and published monthly. Every country has a national institution that cares for it.<\/p> For example, in the USA, the index is calculated by the Bureau of Labor Statistics, and in Britain by the Office for National Statistics.<\/p> You can find the current, previous, and forecast PPI values in the RoboForex Economic calendar<\/a>.<\/p>\n In the US, the BLS releases the PPI for the previous month around the middle of each month, usually within a day or two of the CPI, at 8:30 AM New York time. That is 12:30 UTC while the US is on summer time and 13:30 UTC in winter. The release gives the change against the previous month and against the same month a year earlier, for both headline and core PPI. The UK publishes producer prices together with its CPI at 7:00 AM UK time, and the eurozone publishes industrial producer prices at the start of each month.<\/p>\n The RoboForex economic calendar<\/a> lists every release with its time, the previous value and the analysts' forecast. Check the forecast before the release: the market reacts to the gap<\/a> between the forecast and the actual figure.<\/p>\n\n <\/span>How PPI Affects Currencies, Gold and Indices<\/span><\/h2>\n Currencies.<\/strong> A PPI above the forecast points to higher consumer inflation ahead, so traders expect the central bank to keep rates high or raise them, and the currency usually strengthens. A PPI below the forecast works the other way. The reaction is strongest in the currency of the country that published the report: US PPI moves EUR\/USD<\/a>, GBP\/USD<\/a> and USD\/JPY<\/a>, UK PPI moves GBP pairs, as the two examples below show.<\/p>\n Gold<\/a>.<\/strong> Gold is priced in US dollars and pays no interest, so it tends to fall when US PPI beats the forecast: the dollar and bond yields rise, and holding gold becomes less attractive. A weak PPI often supports XAU\/USD for the same reason in reverse.<\/p>\n Stock indices.<\/strong> Rising producer prices raise companies' costs and make rate cuts less likely, so a strong PPI often weighs on indices such as the US 500. Companies that can pass costs on to customers cope best, which is why the reaction depends on the sector and on what the next CPI shows.<\/p>\n PPI usually moves markets less than CPI. Its impact grows when it arrives a day before the CPI and hints at what that report will show, and when the core figure surprises together with the headline.<\/p>\n \n \n Trade on the Go With RoboForex MobileTrader<\/div>\n A portable trading workstation on your phone, on Android and iOS.<\/div>\n <\/div>\n \n Telegram<\/a>\n Google Play<\/a>\n App Store<\/a>\n <\/div>\n <\/div>\n <\/span>How to Use the PPI in Trading<\/span><\/h2> Take a look at some examples of using the index for trading in the currency market.<\/p> Example 1<\/h3> On September 10th, 2021, the USA published the new PPI value. It turned out to be 8.3% instead of 8.2% expected.<\/p> In the USA, the PPI is published in three structures: by industry, by commodity, and by final and intermediate demand.<\/p> If the index values exceed expectations, the market goes up (the USD is bullish); if otherwise, the USD becomes bearish.<\/p> On the whole, you can trade such fundamental news using pending orders<\/a>. Even such a minor difference (just 0.1%) created a momentum<\/a>, so that the dollar grew, but never bothered other currencies.<\/p> As a rule, waiting for such news, the market consolidates in narrow ranges. Try using M15 and M30.<\/p> Choose the instrument in which it is easier to see the borders of the range, and place pending orders for breakaways of these borders.<\/p> For example, let us look at the reaction of the euro to this news. Check the chart below:<\/p> $\"EUR\/USD$ <\/a> EUR\/USD chart when the PPI in the USA was published<\/em><\/figcaption><\/figure> A pending selling order for a breakaway of 1.1818 downwards would have brought you a profit at 1.1777. This is the goal of the first wave of decline by the trend.<\/p> A pending buying order was to be placed at a breakaway of 1.1855 upwards. But as soon as a selling order is triggered, cancel the buying one.<\/p> Example 2<\/h3> On September 15th, 2021, Britain followed up to publish the PPI. Instead of 0.4% forecast, it was 0.7% , and on the comments the Central Bank representatives said that 4 out of 8 committee members voted for an increase in the interest rate.<\/p> Taken together, this made the market optimistic, and GBP\/USD<\/a> corrected the whole preceding wave of falling.<\/p> The GBP reacted like the USD had done: if the index turns out above expectations, the market becomes bullish, and vice versa.<\/p> As we can see at the GBP\/USD chart, on the day the PPI was published the market went steeply upwards, breaking through 1.3815 and corrected to 1.3853.<\/p> $\"GBP\/USD$ <\/a> GBP\/USD chart at the moment the British PPI was published<\/em><\/figcaption><\/figure><\/span>Summary<\/span><\/h2> The CPI and PPI help traders anticipate the market's reaction to inflation data. However, before opening a position, try to check the signal on some technical indicator<\/a>. Also do not forget to limit your losses wisely.<\/p> I recommend beginners try this out on demo account.<\/p>\n \n Open a Trading Account with RoboForex<\/a>\n <\/div>\n\n <\/span>FAQ<\/span><\/h2>\n \n \n What is PPI in forex?<\/summary>\n PPI, the producer price index, measures the prices producers receive for their goods and services. In forex it matters because it hints at future consumer inflation and therefore at interest rates: a PPI above the forecast usually strengthens the currency, and a reading below it usually weakens it.<\/div>\n <\/details>\n \n What is the difference between PPI and CPI?<\/summary>\n PPI tracks the prices producers receive, and CPI tracks the prices consumers pay. Producer prices usually change first, so PPI works as an early signal, while CPI is the figure central banks rely on most when they set rates.<\/div>\n <\/details>\n \n Is a high PPI good for the dollar?<\/summary>\n In the short term, a US PPI above the forecast usually supports the dollar, because traders expect the Fed to keep rates high. The effect is stronger when core PPI rises too and when the next CPI confirms the trend.<\/div>\n <\/details>\n \n What is core PPI?<\/summary>\n Core PPI is the producer price index without its most volatile parts. In the US, the main core measure excludes food, energy and trade services. It shows the underlying price trend, so a surprise in core PPI often moves markets more than the headline figure.<\/div>\n <\/details>\n \n When is US PPI released?<\/summary>\n The Bureau of Labor Statistics publishes US PPI once a month, around the middle of the month, at 8:30 AM New York time. The exact dates for the year, the previous value and the forecast are in the economic calendar.<\/div>\n <\/details>\n <\/div>\n

Example 2<\/h3>On September 15th, 2021, Britain followed up to publish the PPI. Instead of 0.4% forecast, it was 0.7% , and on the comments the Central Bank representatives said that 4 out of 8 committee members voted for an increase in the interest rate.<\/p>