CPI vs PPI: What Each Inflation Measure Tells You

Inflation is measured from multiple vantage points in the U.S. statistical system. The two most important are the Consumer Price Index (CPI) and the Producer Price Index (PPI). They measure prices at different stages of the economic pipeline.

Consumer Price Index (CPI)

CPI measures prices from the consumer's perspective — what urban households pay for a representative market basket of goods and services. The basket is derived from the Consumer Expenditure Survey (CEX), which samples household spending patterns. Major categories include housing (the largest weight at ~42%), food, transportation, medical care, and education.

There are two main CPI series: CPI-U (all urban consumers, ~93% of the population) and CPI-W (urban wage earners and clerical workers, ~29%). CPI-U is the headline measure. Core CPI excludes food and energy — categories that are volatile and often driven by supply shocks rather than underlying demand — making core CPI a better gauge of persistent inflation trends.

Producer Price Index (PPI)

PPI measures prices from the seller's perspective — what producers receive for their output. It covers three main categories: finished goods, intermediate goods, and crude materials. PPI changes often flow through to CPI with a lag of several months, as production cost increases pass through to retail prices.

During the 2021–2022 inflation surge, PPI spiked sharply before CPI did, as supply chain disruptions raised production costs that were eventually passed to consumers. Watching PPI can give early warning of CPI moves.

Explore CPI data at our inflation section.