Editing Producer price index (section)

{{short description|Price index}}

[[File:Producer Price Index data chart.webp|thumb|350px|Producer Price Index
{{legend-line|#B51700 solid 4px|PPI final demand}}
{{legend-line|#007FFF solid 4px|Core PPI}}
]]
[[File:Producer Price Index Relative Importance.webp|thumb|350px|[[U.S. Producer Price Index]] Relative Importance for commodities <ref>{{cite web | url=https://www.bls.gov/ppi/tables/ | title=PPI Tables : U.S. Bureau of Labor Statistics }}</ref>
{{legend|#00A2FF|[[Fuel]]s}}
{{legend|#929292|[[Metal]]s}}
{{legend|#88FA4E|[[Chemical industry|Chemicals]]}}
{{legend|#F8BA00|[[Machine]]ry}}
{{legend|#FF2600|[[Convenience food|Processed foods]] & feeds}}
{{legend|#D41876|Transportation equipment}}
{{legend|#FFF056|Farm products}}
{{legend|#017100|[[Pulp (paper)|Pulp]] / [[paper]]}}
{{legend|#FF95CA|[[Rubber]] / [[plastic]]}}
{{legend|#000000|[[Miscellaneous]]}}
{{legend|#004D80|[[Nonmetal (chemistry)|Nonmetallic]] [[mineral]]}}
{{legend|#73FDEA|[[Lumber]] / [[wood]]}}
{{legend|#F27200|[[Furniture]] / [[household goods]]}}
{{legend|#8700FF|[[Textile]] / [[apparel]]}}
{{legend|#82AB6D|[[Hide (skin)|Hides]], skin, [[leather]]s}}
]]
A '''producer price index''' ('''PPI''') is a [[price index]] that measures the average changes in prices received by domestic producers for their output. Formerly known as the [[wholesale price index]] between 1902 and 1978, the index is made up of over 16,000 establishments providing approximately 64,000 price quotations that the [[U.S. Bureau of Labor Statistics]] (BLS) compiles each month to represent thousands of different goods and services.<ref>{{Cite web |title=Producer Price Index Home: U.S. Bureau of Labor Statistics |url=https://www.bls.gov/ppi/ |access-date=2023-07-24 |website=www.bls.gov |language=en-us}}</ref>

Its importance is being reduced by the steady decline in manufactured goods as a share of spending.<ref>''The Economist'', Volume 387, May 31{{snd}}June 6, 2009, p. 109</ref> When manufacturers face increased production costs (input costs), businesses must reconsider their pricing approach by either:

# Absorbing higher manufacturing costs, which may maintain customer satisfaction but can impact the company's profitability.
# Transferring those costs to consumers, which may boost business profits, but means customers will face higher prices for the goods and services.<ref>{{Cite web |title=Britannica Money |url=https://www.britannica.com/money/measure-inflation-cpi-ppi-pce |access-date=2023-07-24 |website=www.britannica.com |language=en}}</ref>