CPI vs PPI
Consumer Price Index for All Urban Consumers (FRED CPIAUCSL) measures consumer-level inflation. Producer Price Index for Final Demand (FRED PPIFIS) measures producer-level inflation.
Also known as: CPI (All Urban) (CPI, consumer price index, inflation) · PPI Final Demand (PPI, producer prices)
Why This Comparison Matters
Consumer Price Index for All Urban Consumers (FRED CPIAUCSL) measures consumer-level inflation. Producer Price Index for Final Demand (FRED PPIFIS) measures producer-level inflation. March 2026: PPI final demand +4.0 percent YoY (largest 12-month advance since +4.7 percent February 2023); core PPI ex foods/energy/trade services +3.6 percent YoY (largest since November 2025). CPI +3.3 percent YoY (Iran war oil shock added 0.7pp); core CPI +2.6 percent YoY. PPI exceeds CPI by 0.7pp; core PPI exceeds core CPI by 1.0pp. PPI typically leads CPI by 3-9 months because rising input costs eventually pass through to consumer prices. When PPI exceeds CPI, producer margins are compressing or consumer pass-through is delayed.
The April 2026 Configuration
March 2026 PPI release (April 14, 2026): final demand +0.5 percent month-over-month (well below expected +0.8 percent despite Iran war impact). 12-month PPI +4.0 percent YoY (highest since February 2023 at +4.7 percent). Headline PPI for finished goods accelerated from +1.6 percent to +4.1 percent (highest since February 2023). Core PPI ex foods, energy, trade services +3.6 percent YoY (largest since November 2025).
March 2026 CPI: headline +3.3 percent YoY, monthly +0.9 percent SA. Core CPI +2.6 percent YoY, monthly +0.2 percent SA.
The combined April 2026 reading: PPI exceeds CPI by 0.7pp at headline level; core PPI exceeds core CPI by 1.0pp. Configuration suggests producer-level inflation pressure exceeds consumer-level. Two interpretations: (1) producer margins compressing as cost increases not fully passed to consumers; (2) producer inflation will lead consumer inflation higher in coming months.
The Iran war impact is asymmetric: PPI rose 0.5 percent (well below expected) despite war impact, suggesting producer margin compression rather than passthrough. CPI rose 0.9 percent month-over-month (above core 0.2 percent) reflecting energy price surge directly hitting consumers.
Why PPI Leads CPI
PPI typically leads CPI by 3-9 months. The transmission mechanism: producers face input cost increases (commodity prices, wages, intermediate goods); margins initially compress; eventually pass-through to wholesale prices captured by PPI; final demand prices charged to wholesalers; wholesale prices charged to retailers; retailers pass through to consumer prices captured by CPI.
Lag mechanics. Commodity price spike: energy, metals, food. Captured in PPI within 1-2 months. Manufacturing pass-through: 2-4 months as inventory turnover. Wholesaler-to-retailer: 1-2 months. Retailer pass-through to consumer: 2-3 months. Total cycle: 6-11 months from commodity spike to CPI impact.
The practical implication: monitoring PPI provides early warning for CPI. PPI accelerating suggests CPI acceleration ahead. PPI deceleration suggests CPI deceleration ahead (with 6-9 month lag).
April 2026 setup: headline PPI accelerating to 4.0 percent YoY suggests CPI may rise above current 3.3 percent in coming months. Core PPI 3.6 percent suggests core CPI may rise above current 2.6 percent. Iran war + tariffs are catalyzing the PPI surge that may transmit to CPI by Q3-Q4 2026.
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Frequently Asked Questions
What are CPI and PPI?+
Consumer Price Index for All Urban Consumers (FRED CPIAUCSL) measures consumer-level inflation. Producer Price Index for Final Demand (FRED PPIFIS) measures producer-level inflation. March 2026 PPI release April 14: final demand +0.5% MoM (well below 0.8% expected despite Iran war impact). 12-month PPI +4.0% YoY (highest since +4.7% February 2023). Headline PPI for finished goods +1.6% to +4.1% (highest since February 2023). Core PPI ex foods, energy, trade services +3.6% YoY (largest since November 2025). CPI +3.3% YoY; core CPI +2.6%. PPI exceeds CPI by 0.7pp at headline; core PPI exceeds core CPI by 1.0pp.
Why does PPI lead CPI?+
PPI typically leads CPI by 3-9 months. Transmission: producers face input cost increases (commodity prices, wages, intermediate goods); margins initially compress; eventually pass-through to wholesale prices (PPI); wholesale prices to retailers; retailers to consumers (CPI). Lag mechanics: commodity spike captured in PPI within 1-2 months; manufacturing pass-through 2-4 months; wholesaler-to-retailer 1-2 months; retailer pass-through 2-3 months. Total: 6-11 months. April 2026: PPI 4.0% YoY suggests CPI may rise above current 3.3% in coming months. Core PPI 3.6% suggests core CPI may rise above current 2.6%. Iran war + tariffs catalyzing PPI surge that may transmit to CPI by Q3-Q4 2026.
How are Iran war and tariffs affecting inflation?+
Two transmission channels. Iran war oil shock (Feb 2026 onset): WTI $95.85 (April 2026, +30% from January 2026). Oil transmits to PPI in 1-2 months (energy components, transportation); to CPI in 2-3 months (gasoline, energy bills). Net: PPI rose 4.1% for finished goods (March 2026); CPI 3.3%. Tariff environment: Trump-era escalations 10-25% on specific categories raised PPI for affected goods. Pass-through to CPI: 50-100% for non-substitutable imports; 30-50% for substitutable. Net: PPI core ex foods/energy/trade +3.6% (March 2026) reflects tariff impact. April 2026 PPI 4.0% YoY likely transmits to CPI 3.5-4.0% YoY by Q3-Q4 2026 if passthrough continues.
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Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.