What is the Wholesale Price Index’ relationship to Inflation?
Wholesale Price Index
What is the Wholesale Price Index?
The Wholesale Price Index is a monthly report that measures and tracks the change in price for goods before those items hit retail level. This would be the price paid between businesses for bulk good orders, not the prices paid by consumers. The U.S. measures movements in price of all commodities flowing into a primary market. Because a primary market includes goods at any stage of fabrication some products may be counted multiple times. For example, cotton would be included in its raw stage, yarn, clothing, or other objects.
Why is the Wholesale Price Index valuable?
When looked at in relationship to the Consumer Price Index and Producer Price Index, this index is a key indicator of inflation within a given economy. By comparing the change in price year over year, the Wholesale Price Index can signal how quickly prices are changing. Ultimately these prices get passed on to consumers. When consumer prices increase quickly it can be a signal of inflation in the economy.
What should you do?
Understanding the Wholesale Price Index can provide greater clarity into how inflation is impacting the health of the economy. Majestic’s CORE Report follows the Wholesale Price Index; along with other indicators every week to see where the market stands.
Source: Investopedia.com
