What are the Producer Price Indexes?
The Producer Price Indexes (PPIs) measure changes in the price of goods and services from the perspective of producers, either as they leave the place of production or as they enter the production process. Other measures, such as the Consumer Price Index (CPI), measure price change from the consumers' perspective. When measuring prices from the seller’s perspective, factors such as distribution costs, taxes and the impact of government subsidies are generally excluded. There are key distinctions between the PPI's within this publication. The Final Demand Index is compiled on a net basis, meaning it excludes transactions occuring within or between industries to avoid double counting. In contrast, industry-specific PPIs, such as Mining, Manufacturing, Construction, and Services are compiled on a gross basis, which includes all transactions within an industry and between industries. More information can be found in the Producer Price Indexes methodology.
Final Demand Index
Final Demand measures the price change of products (goods and services) at the final stage of the production cycle, meaning they are consumed with no further processing. The index covers both domestically produced and imported products ready to be sold for immediate domestic consumption or capital formation. Unlike industry PPIs (see below), the Final Demand Index excludes transactions occuring within or between industries. For example, sugar cane is a preliminary product and used as an input into the production of raw sugar. In turn, raw sugar is an intermediate product which is then used to produce the final product, refined sugar. Final Demand captures final products destined for final consumption, with no further processing. More information can be found in the Producer Price Indexes methodology.
Image
Description
This image illustrates two examples for the three stages: preliminary products, intermediate products, and final products:
1. Sugar cane is a preliminary product and used as an input into the production of raw sugar. In turn raw sugar is an intermediate product which is then used to produce the final product, refined sugar.
2. Wheat is a preliminary product and used as an input into the production of flour. In turn flour is an intermediate product which is then used to produce the final product, bread.
Industry Indexes
The Industry indexes are indexes that measure the price change of products (goods and services) as they leave the place of production or as they enter the production process. These include Mining, Manufacturing, Construction, and Services indexes, and are compiled on a gross industry basis. This means that the scope of the indexes includes all transactions occurring within an industry, and between that industry and other industries. The Industry indexes also include input indexes, as opposed to the Final Demand Index, which is soley an output index. For more information on the Industry indexes refer to the Producer Price Indexes, methodology.
A full reweight of all Producer Price Indexes (PPIs) will be published in September quarter 2026, consisting of an update to the weights of all published indexes, in line with the 2023/24 Australian National Accounts: Input-Output tables. Weights represent the structure of the Australian economy and determine which prices have the greatest contribution to the PPIs.