Wholesale and Retail Producer Price Indexes: Margin Prices

Abstract

Almost all Producer Price Indexes (PPIs) measure changes in prices received by establishments for the sale of goods produced or services provided. PPIs for the trade sector, which includes wholesale and retail trade services, are the exception to this method. Trade sector output, by the PPI program’s definition, is not directly measurable, so margin prices are calculated as a substitute. Referred to as margin indexes, these PPIs track changes in prices received, less the acquisition price of goods sold by wholesalers and retailers. This article explains the rationale behind measuring trade sector output using margins, addresses challenges presented by this technique, and clarifies how margin PPIs should be interpreted.