Industrial Livestock Farms’ PPI Up 52% in Fiscal 2018-19

EghtesadOnline: The Producer Price Index for industrial-scale livestock farms (using 2011 as the base year) stood at 371.18 in the last Iranian year (March 2018-19), indicating a 52.48% increase compared with the year before.

News ID: ۷۴۷۴۰۰

22 May 2019

Khuzestan and Kohgilouyeh-Boyerahmad provinces posted the sharpest growth with 70.62% and 68.76% respectively compared with the year before, the Statistical Center of Iran reported.

The index registered a year-on-year growth of 14.61% and quarter-on-quarter increase of 2.87% to reach 264.06 in the first quarter that ended on June 21, 2018.

The index stood at 332.99 in Q2 (June 22-Sept. 22, 2018), indicating a YOY growth of 40.31% and QOQ increase of 26.1%, according to Financial Tribune.

The index registered a YOY growth of 63.1% and a QOQ increase of 22.08% to reach 406.57 in the third quarter that ended on Dec. 21, 2018.

The index stood at 481.11 in Q4 (Dec. 22, 2018-March 20), indicating a YOY growth of 87.42% and QOQ increase of 18.34%.

The importance of PPI lies in its predictive content for the future pattern of Consumer Price Index. Changes in PPI are usually reflected in CPI within a short period of time.

PPI gauges the price fluctuations of goods and services for the producer whereas CPI measures changes in the price level of a basket of consumer goods and services purchased by households.

In other words, PPI is an index of prices measured at the wholesale, or producer level. It shows trends within the wholesale markets (as it was once called the Wholesale Price Index), production industries and manufacturing industries and commodities markets from the perspective of the seller.

According to Investopedia, PPI can serve multiple roles in improving investment-making decisions because it can serve as a leading indicator of CPI.

When producers are faced with input inflation, rising costs are passed along to the retailers and eventually to the consumer.

PPI presents the inflation picture from a different perspective than CPI. Although changes in consumer prices are important for consumers, tracking PPI allows one to determine the cause of changes in CPI.

If, for example, CPI increases at a much faster rate than PPI, such a situation could indicate that factors other than inflation may be causing retailers to increase their prices.

However, if CPI and PPI increase in tandem, retailers may be simply attempting to maintain their operating margins.

All in all, a decrease in PPI is one of the signs of a probable slowdown in CPI in future months. Almost a perfect correlation exists between CPI and PPI.

According to the Statistical Center of Iran, the goods and services Consumer Price Index in the 12-month period ending March 20, which marks the end of the last fiscal year, increased by 26.9% compared with last year’s corresponding period.