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B. Producer price index
Producer price index is one of the alarms that can provide early warning about inflation in the future. By knowing the price index, each company can predict price movements over the next several periods.
Inflation is a process of increasing prices in general and continuously related to market mechanisms which are influenced by many factors, such as increased public consumption, excess liquidity in the market which triggers consumption or even speculation, to the uneven distribution of goods. Inflation is an indicator to see the level of change, and inflation is considered to occur when the price increase process is continuous and influences one another. There are many ways to measure the inflation rate, but the two most frequently used are the Consumer Price Index (CPI) and the GDP Deflator.
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