The Economy & the Fed

Stages of Production

The Bureau of Labor Statistics also sorts producer prices by how far along the chain a product is. Raw (unprocessed) materials such as crude oil, ore and grain are at the top; processed materials such as steel, fuel and flour come next; finished goods are ready for their final buyer. A price rise often starts at the top and reaches later stages in the months that follow, shrinking on the way because materials are only part of what a finished product costs. That is why producer prices are read as an early hint for consumer prices.

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