What to expect from CPI after a PPI :

There is always a intriguing question to read news and read them effectively especially if you are a full time trader , so let's solve that dilemma

To understand this fully we need to understand the following things sequentially

1.What is PPI

2.What is CPI

3.How you can relate these two for better understanding as a Trader?

PPI :PRODUCER PRICE INDEX

"A measure of the average change in the prices domestic producer receive for their output"

• It always give the price changes at the wholesaler end not at  the consumer end.
• It is also a measure of inflation at the producer level
• The news PPI coms monthly in the mid of the month

let us understand it with an example:

Consider Samsung company that produces the Android phones for the end user but do not sell the phone directly to the end user. As the product finished from its warehouse it reaches to the wholesaler then wholesaler send these products to the retail shopkeepers from where end user purchases

So this index always tells about the price changes from Samsung to that wholesaler . It doesn't have any concern to the end user

So if in any case Samsung increases the cost of the product to the wholesaler then ultimately cost will also increase for the end user which ultimately shows that inflation is high

What does it mean to a trader: for a trader higher reading of PPI means that is good for currency and bad for stocks and vice versa

How it relates to the CPI :

PPI shows prices at the wholesaler end and CPI shows prices at the end of consumers which may include service fees transportation fees etc.

So for a trader keep  that in mind if the goods prices increase at the wholesaler end then it definitely going to increase at the consumer end which in turn results that both are directly proportional

Conclusion: PPI number always helps to track down and to predict the outcome of CPI number if you are a trader.

1 . PPI high >CPI high > good for currency 💲>bad for stocks & gold

PPI low>CPI low>bad for currency 💲>good for stocks & gold

All the best .