Spain Producer Price Index (PPI) y/y

Spain Producer Price Index (PPI) y/y is a macroeconomic indicator which measures the dynamics of prices received by the country's or region's production sector in the given month compared to the same month of the previous year. The index can show whether the prices for economic products have increased or decreased regardless of their commercialization ways. The index covers three production areas: industrial, raw materials and processing. The PPI reflects price changes from the producer perspective.

In Spain, the index is published by the National Statistics Institute. In most cases the index is published as a numeric value which enables the calculation of percentage changes in prices for the production basket. The index is calculated based on data collected from surveys. The index calculation requires clear company selection criterion based on operation characteristics. Also the index includes prices for a certain group of products, changes in which global prices reflect changes in millions of transactions. Statistical organizations monitor prices of such products and weigh price variations according to relative incomes. The positive index value means that the production sector is experiencing the inflationary process.

Changes in product prices are dependent on supply, so occurring price drops do necessarily result from a decrease in demand. Thus, when analyzing the Spanish Producer Price Index, it is necessary to take into account the lack of flexibility in the formation of costs, prices and wages.

The Spanish PPI also depends on producers' purchases and sales of resulting products. Producers' purchases are reflected in the index as expenditure. This component enables the evaluation of changes in goods and services purchased by manufacturers. Sales are shown as an index of products, which demonstrates changes in prices for products sold directly from the manufacturer.

The Producer Price Index is considered as a leading indicator of consumer prices and inflation. This leading indicator is considered to be more accurate than the Consumer Price Index: if prices from a producer increase, consumer prices are most likely to rise accordingly, which is why there is a direct relation between these two indices.

A greater than expected value should be seen as positive for the euro quotes, while lower values are usually seen as negative.