Which macroeconomic index is specifically designed to measure price changes experienced by domestic producers at various stages of manufacturing before goods reach retail markets?

💡 Solution & Explanation

The Producer Price Index measures the average change over time in the selling prices received by domestic producers for their output, capturing price movements at the wholesale and manufacturing stages. Unlike the Consumer Price Index which reflects the final retail consumer basket, the Producer Price Index includes intermediate goods and services. Central banks monitor producer price trends as an early indicator of pipeline inflationary pressures. The Reserve Bank of India periodically evaluates transitioning its wholesale inflation tracking toward producer price indices.