Question

What is the Difference between CPI and PPI? Why as an economist do I look at PPI before CPI ? What Can it tell you?

Answer 1

CPI is the consumer price index used to measure the inflation rate from the consumer's point of view that is inflation rate of the finished goods.

PPI is the producer price index used to measure the inflation rate from the producer's point of view that is inflation rate of the intermediate goods and finished goods or the goods sold by producers.

As an economist I would look at PPI before CPI because PPI tells the inflation rate of intermediate goods as well. So when PPI increases that is price of intermediate goods increases, the burden of higher price will pass on to consumers that would result in increase in CPI as well.