Comparing New Final Demand Producer Price Indexes with Other Government Price Indexes

• Activity Number: 316
• Type: Contributed
• Date/Time: Tuesday, August 6, 2013 : 8:30 AM to 10:20 AM
• Sponsor: Government Statistics Section
• Author(s): Jonathan Weinhagen*+
• Companies: BLS
• Keywords: price indexes ; index aggregation

Abstract

The Producer Price Index (PPI) program of the Bureau of Labor Statistics recently introduced experimental indexes measuring price change for outputs sold to overall final demand and to the four major components of final demand: personal consumption, capital investment, export, and government. The PPI for overall final demand measures price change for approximately the same portion of the economy as the Bureau of Economic Analysis (BEA) GDP price indexes for gross domestic product and gross domestic purchases. Likewise, the PPIs for personal consumption and exports measure price change for roughly the same portion of the economy as the Consumer Price Index (CPI) and International Price Program (IPP) index for exports, respectively. This paper examines methodological and empirical similarities between these sets of price indexes. The paper shows that although the new PPIs appear to measure price change for same portions of the economy as price indexes from the BEA, CPI, and IPP, important methodological differences exist between the indexes, which can result in differing index movements for apparently similar indexes.