Sustainable Trends in Producer Price Indices

11 Pages Posted: 13 May 2009

See all articles by Ivan Kitov

Ivan Kitov

Russian Academy of Sciences (RAS) - Institute for the Geospheres Dynamics

Oleg Kitov

University of Warwick

Date Written: May 13, 2009

Abstract

Previously, linear trends were revealed in the differences between the headline CPI and the price indices for various subcategories of the CPI in the United States. These trends can be continuous, as observed with the price index for medical care, or piecewise with turning points between trends with opposite signs. Similar features are found for the PPI and its components. The presence of sustainable trends in the differences allows prediction of prices for various commodities at time horizons of several years. In addition, it is possible to time the start of transition to the next trend. Accordingly, the trends reduce the uncertainty in forecasting prices for major commodities and also for their small components. The usage of trends in the PPI could bring substantial benefits to producers (planning) and stock market participants (timely investment).

Keywords: PPI, CPI, US, prediction

JEL Classification: E31, E37

Suggested Citation

Kitov, Ivan O. and Kitov, Oleg, Sustainable Trends in Producer Price Indices (May 13, 2009). Available at SSRN: https://ssrn.com/abstract=1403788 or http://dx.doi.org/10.2139/ssrn.1403788

Ivan O. Kitov (Contact Author)

Russian Academy of Sciences (RAS) - Institute for the Geospheres Dynamics ( email )

Leninsky prospect 38/1
Moscow, Moscow 119334
Russia

HOME PAGE: http://idg3.chph.ras.ru

Oleg Kitov

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

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