Indexes Trace Trends in Economy

Economists look at several gauges to trace trends in inflation. Here is a glance at a few of them:

Consumer price index: The most widely quoted barometer of consumer inflation, the CPI is based on price changes in such goods and services as housing, food, transportation, health care, entertainment and others.

Despite its widespread use, some analysts question how accurately the CPI gauges current inflation because it includes assumptions of spending behavior based on a survey taken between 1982 and 1984. The Labor Department reports this statistic monthly.

Producer price index: Unlike the better-known CPI, the PPI considers price changes in goods that have not yet reached the consumer.

It offers inflation readings for crude products, such as scrap metal and iron ore, intermediate goods, such as certain fuels and chemicals, and finished goods--groceries and other products that will reach consumers shortly. Analysts are closely monitoring recent jumps in the PPI. It is reported monthly by the Labor Department.

GNP implicit price deflator: A ratio of the nation’s current gross national product to the GNP in 1982, the deflator is an attempt to measure overall price changes for all the goods and services produced in the United States. But economists say it is more reliable as a gauge of production costs than of consumer prices. The deflator is released quarterly by the Commerce Department.

Fixed weighted price index: Economists say that this index, calculated somewhat differently from the deflator, does a more accurate job of computing changes in inflation. For example, it maintains consistent assumptions about spending patterns when it compares different periods. Nonetheless, its 1982 assumptions also may be out of date. It is released quarterly by the Commerce Department.

Commodity prices: Numerous measures of price changes in commodities and basic materials are used as a way to gain a hint of underlying inflation and for investment strategy. These include the Agriculture Department’s monthly farm price index, the Commerce Department’s sensitive materials price index, a commodities index compiled by the Journal of Commerce newspaper and an index of commodity futures prepared by the Commodity Research Bureau.