What is the difference between CPI and PPI?

CPI or consumer price index is a report compiled monthly by the Bureau of Labor Statistics. The report calculates inflation that measures changes in the prices of goods and services. This report includes the cost of housing, food, clothing, medical care, and many other items. The purpose is so that adjustments can be made in social security payments, wages, and tax brackets so that people can keep up with the increased cost of living.

The Bureau of Labor Statistics also compiles PPI or the producer price index; however, it tracks the cost for the industry that makes the products. The PPI helps the producer know how much to charge for their product, primarily when contracts that cover more than one year. The purchaser can include a quarterly review of pricing with the ability to adjust the pricing.