| They both measure price change, just from different perspectives.
The Producer Price Index (PPI) is a family of indexes that measures the
average change over time in selling prices for domestic producers of goods
and services. Therefore, the PPI measures price change from the perspective
of the seller.
The CPI measures price change over a period of time of a fixed basket of goods and services. The reason price changes are measured from both the perspective of sellers and buyers is that prices may differ due to government subsidies, sales and excise taxes, and distribution costs. In general, the prices of goods has risen more slowly than the price
of services. The reason is that there has been a tremendous advance in
technology, which has improved the productivity in the production of goods.
Services, on the other hand, are more human intensive in nature. |