PPI (Producer Price Index)

The Producer Price Index (PPI) measures how much prices are rising or falling at the wholesale level—basically what manufacturers and suppliers pay for raw materials and goods before they reach store shelves. You'll hear economists and financial news mention PPI because it's an early warning sign of inflation (rising prices across the economy). If PPI jumps, consumer prices usually follow a few months later, which affects everything from stock valuations to interest rates. For example, if steel prices spike, the PPI rises, signaling that companies might soon raise prices on finished products, potentially squeezing their profits. It's one of several economic reports investors watch to gauge the health of the economy.