Producer price index in the offing
Local Industries, manufacturing companies and investors will have easy access to trends within the manufacturing industries, wholesale and commodities markets through the producer price index (PPI) which the National Statistics Office (NSO) will soon start compiling.
The PPI is an economic indicator which does not represent prices at the consumer level just like the consumer price index (CPI), but uses a benchmark year in which a basket of goods is measured and every year after is compared to the base year and has a value of 100.
NSO commissioner of statistics Mercy Kanyuka told Business News in interview that a new series used to measure inflation for producers will be released on a quarterly basis and published on the NSO website.
She said the new series offers added advantage to producers as it measures the average change in the prices that domestic producers receive for the output they sell.
“This is an inflation indicator that gives the producer actual prices of the commodities from the producer point of view. This is before the producer factors in transport costs, taxes and other expenses,” she said.
On his part, Malawi Confederation of Chambers of Commerce and Industry (MCCCI) president Karl Chokotho said the importance of the PPI—as opposed to Consumer Price Index (CPI which is the normal inflation cannot be over emphasized for producers.
He said the PPI as an indication of the general rise in the prices of inputs for production such as electricity, water, wages for factory labour is important in predicting CPI.
“The PPI is not only important for industry players but government as well because this could help the government understand at what level inflationary pressures are intense and perhaps do something about it,” he said.
He said the central bank should be in a position to make policy changes on the basis of knowledge of PPI.
While the PPI is used to cover the physical goods many services-based industries, the information is useful a as tool to examine sales and earnings trends.
