A common question I get from individuals who take the NLPA’s online procurement courses is “What is the difference between the PPI & the CPI?”

Both the Producer Price Index (PPI) and the Consumer Price Index (CPI) are US government-published indices that measure the changes in pricing over time for various categories of goods and services.

Generally, the PPI represents price levels received by the initial producers of products and services (often from wholesalers, distributors, and other non-consumers early in the supply chain).  And, generally, the CPI represents price levels paid by ultimate consumers from the last link in the supply chain (e.g., retailers).  Therefore, the PPI is more commonly used than the CPI by procurement professionals.  However, in cases where a buying organization is the ultimate consumer for a product, material or service, then the CPI would be appropriate for use by a procurement professional in that buying organization.

Here are links to more specific definitions and differences if you wish to learn more:

Consumer Price Index

Producer Price Index

Comparing the PPI to the CPI

Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is the Founder of the Next Level Purchasing Association. Charles is also the Co-Author of "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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