Which of the following measures gives the earliest warning of increasing inflation?
A) The Consumer Price Index
B) The Producer Price Index
C) The Personal Consumption Expenditure Index
D) All of these should signal the same short-run inflation

Question

Quizplus · Accepted Answer

The Producer Price Index measures the average changes in prices received by domestic producers for their goods and services. Since producers will typically experience cost increases before they are reflected in consumer prices, the producer price index tends to give an earlier warning of increasing inflation compared to the consumer price index or personal consumption expenditure index.

Which of the Following Measures Gives the Earliest Warning of Increasing