What is the PPI and the CPI?

Tom Gentile

Posted in Education

By: Tom Gentile on October 10th, 2022 • 3 mins read

These two key economic pieces of data are due out this week and if the markets react like they did the last time they were reported it will be a volatile week!

PPI: Producer Price Index

This report is due out Wednesday.

The PPI is a grouping of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. It measures price change from the perspective of the seller.

 There are three main PPI classification structures which draw from the same pool of price information provided to the BLS by cooperating company reporters:

  1. Industry classification. A Producer Price Index for an industry is a measure of changes in prices received for the industry’s output sold outside the industry
  2. Commodity classification. The commodity classification structure of the PPI organizes products and services by similarity or material composition
  3. Commodity-based Final Demand-Intermediate Demand (FD-ID) System, which regroup commodity indexes for goods, services, and construction

CPI: Consumer Price Index

This report is due out Thursday.

The CPI is different from the PPI in that it measures price change from the purchaser’s perspective.

One can read up more about these reports on www.investopedia.com. They have solid info on what they are and what they mean and help you in your research on assessing what you anticipate from the markets.

The CPI measures the monthly change in prices paid by U.S. consumers.

The Bureau of Labor Statistics (BLS) calculates the CPI as a weighted average of prices for a basket of goods and services based on U.S. consumer spending.

Other Economic Items the Week of October 10-14, 2022

Two other economic items of note due to come out this week are 1) The release of the last Fed meetings minutes and 2) Retail Sales data.

The release of the minutes from the last Fed meeting should provide more insight  on their inflation outlook, as well which members’ expressed their policy biases and what they are.

Remember what they did last time they met was downgrade GDP and employment forecasts at the same time they upped their inflation estimates. Let’s see what clarity the minutes offer towards these concerns and what investors do with their money after getting said clarity.

On Friday, retail sales numbers are going to be reported.

Options Trading?

One can let this week’s batch of data play out and refrain from trying to place any options trades or, if one anticipates the data once reported confirms their directional bias for both them and their broker maybe they pursue an options trade then.

For us, we look to our scans and are always open for an options trade once we gain a greater conviction for market direction.

App: Toms Option Tools

Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.

Other times I will have other charts may work to amplify my educational points. 

Those options data lists, however, can be found on my app Tom’s Option Tools. Use your device to search up and download this app and get free access to the Morning Reports section of the app.

Other parts of the app are available at a premium subscription rate, but the Morning Reports Lists are yours free.