The latest Producer Price Index (PPI) showed wholesale inflation was up 3.5% year-over-year in January, and higher by 0.4% from December. The numbers were met with mixed reactions, from “hot” to “benign” as economists try to gauge direction of the world’s largest economy.

PPI  measures the weighted average price of all first-stage goods (like metals, lumber, and natural gas) produced in the US. PPI and its cousin the Consumer Price Index (CPI) both address inflation. CPI addresses the average cost of goods and services at their final destination. PPI is more of a leading indicator, helping predict where the economy is in its economic cycle.  What is the impact of tariffs?

Tariffs are not retained by producers as revenue. They are explicitly excluded from the PPI. However, pricing decisions that producers make in reaction to tariffs are included in the PPI.

For more:

Producer Price Index Frequently Asked Questions : U.S. Bureau of Labor Statistics