PPI and CPI

PPI refers to the costs businesses incur when purchasing raw materials and hiring labor.

CPI, on the other hand, is the consumer price index — what you spend on finished goods and personal services.

Rising prices are bad for individuals, but moderate inflation is good for the overall economy. When prices climb, people spend instead of hoard. If they don’t, nobody spends, nobody hires, and we all end up unemployed, trapped in a downward spiral. Reverse that, and everyone’s spending. Companies ramp up production, hire more people, and money circulates. Individuals might not be saving much, but the standard of living rises — infrastructure improves, services get better, and the whole society moves forward.

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