Measuring services in the producer price index

The US Producer Price Index (PPI) Program continues to expand coverage with a new economy-wide index model based on the input-output tables produced by the US Bureau of Economic Analysis (BEA). All marketed US domestic production of goods and services is considered in-scope under the new economy-wide index model. An important benefit of the PPI’s expanded coverage is the production of a more comprehensive set of deflators that in turn should lead to improved measures of real Gross Domestic Product (GDP) and productivity. The deflation properties of a price index are partly dependent on how statistical agencies respond operationally to the conceptually difficult price measurement challenges presented by service industries such as finance, consulting or medical care. Several criteria can be used to access the accuracy and relevance of deflators that vary according to the complexity of the price measurement challenge. There are major issues to be resolved both in developing the new data product and in educating the user public about the new data product and its relationship to the existing PPI.