framleiðsluverðsvísitala

The framleiðsluverðsvísitala, or producer price index (PPI) in English, is an economic indicator that measures the average change over time in the prices received by domestic producers for their output. It tracks the prices of goods and services at the wholesale level, before they reach consumers. The PPI is a crucial tool for understanding inflationary pressures within the economy, as it reflects the costs faced by businesses.

Changes in the PPI can be a leading indicator of future consumer price index (CPI) changes. When producers face higher input costs, they may eventually pass these costs on to consumers in the form of higher retail prices. Therefore, monitoring the PPI helps policymakers, businesses, and economists anticipate potential shifts in inflation.

The index is typically calculated by surveying a basket of goods and services representative of a nation's industrial production. These goods can include raw materials, intermediate goods, and finished goods. The prices collected are weighted according to their importance in the overall economy. Different methodologies exist for calculating the PPI, with variations in the scope of goods and services included and the weighting schemes employed. Its primary purpose is to provide a measure of price trends from the perspective of the producer.