There is a fixed price of consumer goods and services. This is what is usually averaged to end up with the CPI. The report is usually issued on a monthly basis. It is this report that is usually used to determine the rate of inflation of the goods and services for consumers.
It is an important statistic to understand since the economic activity usually takes into account consumer spending. However, the prices of more volatile items like food and energy are usually excluded here. So, when the CPI is high, there is usually an expectation of short term higher interest rate and this would support the currency.
Producer Price Index [PPI] This is the same description as that of CPI just that it relates to producers or manufacturers. It indicates commodity inflation. It accounts for price changes within the manufacturing sector.
When it is high, there will be high prices on consumer goods and this would mean that the interest rates would also go high. With prior knowledge of this, you can be prepared so that you are not surprised with the commodity prices.
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