Long Term Perspective
The PPI for finished goods has expanded more rapidly than the CPI on a year-over-year basis in 2005, reflecting higher price increases that were not totally passed on to consumers. This trend continued into 2006 until in the third quarter, the PPI slowed more than the CPI. Strong services inflation has kept the CPI up while the slowing economy has had more impact on the PPI which does not have services.

Short Term Perspective
Both the PPI and the CPI have slowed sharply over October and September with the PPI actually posting a very negative number in October. Lower prices for petroleum-based products (such as gasoline) were primarily responsible for the recently weak numbers.