Abstract
A variety of tools are used to measure price changes taking place in an economy. These include consumer price indices (CPI), price indices relating to specific goods and/or services, GDP deflators and producer price indices (PPI). Whereas CPIs are designed to measure changes over time in average retail prices of a fixed basket of goods and services taken as representing the consumption habits of households, the purpose of PPIs is to provide measures of average movements of prices received by the producers of commodities. Producer price indices measure changes in prices at an early stage in the production process. Because of this, they are often seen as advance indicators of price changes throughout the economy, including changes in the prices of consumer goods and services.
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