Industrial Chicken Farms’ PPI Up 50% in 2018-19

EghtesadOnline: The Producer Price Index for industrial chicken farms (using 2011 as the base year) stood at 409.86 in the last Iranian year (March 2018-19), indicating a 50.23% increase compared with the year before.

News ID: ۷۸۴۶۷۷

20 May 2019

The PPI for chicken increased by 89.41% and for eggs by 32.65% year-on-year.

Gilan Province posted the highest growth with 132.52% and Ardabil saw the lowest increase in the index with 25.62%, the Statistical Center of Iran reported.

The index registered year-on-year growth during all four quarters of last year: The biggest YOY increase was posted in Q4 (Dec. 22, 2018-March 20) with 79.38%, according to Financial Tribune.

Quarter-on-quarter growth in the index was observed for all quarters, except Q1 (March 21-June 21), with a deflation of 6.96% last year.

Producer inflation of industrial chicken farms QOQ posted the biggest rise in Q3 (Sept. 23-Dec. 21, 2018) with 32.71%.

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 measures 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 (and was once referred to as 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, those rising costs are passed along to retailers and eventually to consumers.

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. A nearly 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 last Iranian year, increased by 26.9% compared with last year’s corresponding period.