Consumer Price Index (CPI)

The Consumer Price Index, or CPI for short, is an index that measures changes in the prices of goods and services purchased by the consumer. When calculating the CPI, the expenditures made by the sample group representing the general population of a country on goods and services within a year are summed up. According to this expenditure structure, the relative shares of goods and services in the index are determined.

CPI and PPI

The producer price index, briefly PPI, is an index that measures the change in producer sales prices of total goods and services produced in a certain time period. The consumer price index, on the other hand, shows the average changes in the prices of a particular group of products and services purchased by a normal consumer.

CPI is the index that shows the change in the final prices that concern the consumer in the price indicators used to measure the change in the annual inflation value.

Effects of CPI and PPI on Each Other

It is a phenomenon that can be expected to reflect the increases in the PPI to the CPI after a while. Therefore, the effects of the phenomena affecting the producer costs on the consumer prices are delayed and inevitable up to a certain extent, although not at the same coefficient. We can see many examples of this in our daily life.

On the other hand, naturally, CPI and PPI correlation is not the same in every country and in every period. Regarding the realizable dimensions of inflation, whichever of the PPI and CPI is higher, general welfare and stability in prices will change.