Long Term Perspective
After removing volatile food and energy prices, the PPI is rising more slowly than the CPI on a year-over-year basis - in fact, the PPI fell in the third quarter, although not in the fourth quarter of 2002, or the first quarter of 2003. One factor to keep in mind is that the CPI primarily consists of services, where prices are accelerating, while the PPI consists of goods only, where competitive pressures are stronger.

Short Term Perspective
Excluding the volatile components, the CPI has improved dramatically on a year-over-year basis. This could be due to improvement in the service component, which covers nearly 60 percent of the total CPI. The core PPI has posted year-over-year increases in the three most recent months. Keep in mind that the PPI measures prices of goods that tend to react more dramatically to competitive pressures than prices of services.

PPI: Intermediate vs. Crude Materials   •   Excluding Food & Energy Prices: Intermediate vs. Crude   •   CPI vs. PPI - Finished Goods

Excluding Food & Energy Prices : CPI vs. PPI   •   Employment Cost Index vs. Wages & Salaries   •   Alternative Inflation Measures