The consumer price index [CPI] measures price changes at an earlier stage of production than the producer price index [PPI], hence, increases in the CPI are usually followed by increases in the PPI.

Question

Quizplus · Accepted Answer

The statement is incorrect. The CPI measures price changes at the final stage of production, where goods and services are sold to consumers. The PPI, on the other hand, measures price changes at earlier stages of production, such as raw materials and intermediate goods. Therefore, increases in the PPI are usually followed by increases in the CPI.

The Consumer Price Index [CPI] Measures Price Changes at an Earlier