n the latest release of the Producer Price Indexes (PPIs) for Australia, the data for June 2023 reveals a significant 0.5% rise in final demand (excluding exports). The PPIs provide crucial insights into the price changes of various products, including goods and services, as they leave the production process or enter it. These price changes are measured from the perspective of the industries that produce these goods and services.
The PPIs play a vital role in understanding inflationary pressures within the Australian economy. Unlike the Consumer Price Index (CPI), which measures price changes from the consumers’ perspective, the PPIs focus on the producer side, making it a valuable indicator for businesses and policymakers.
Final demand, as highlighted in the report, refers to the price change of products consumed with no further processing. It represents the end products that are ready for final consumption by consumers or other end-users. For instance, in the case of sugar, the preliminary product is sugar cane, which is then processed into raw sugar, and eventually refined into the final product, refined sugar. The PPIs capture the price changes of these final products destined for consumption without any further processing.
The data shows that the final demand index rose by 0.5% during the specified quarter. Moreover, when considering the price changes over the past twelve months, the final demand index experienced a notable increase of 3.9%. This suggests that the cost of final products has risen at a considerable rate over the last year, indicating potential inflationary pressures within the Australian economy.