<p>Suppose that PPI is increasing while CPI is decreasing. interpereting this is somewhat tricky because different contexts are at play: CPI is largely domestic driven while PPI has global determinants.</p>
<p>Here is an overview of my research findings:</p>
<p>Assuming perspective of the general, Asian economy:</p>
<p><strong>Factors that could explain increase in PPI</strong></p>
<ul>
<li>central bank liquidity tightening</li>
<li>currency appreciation</li>
<li>reducing reliance on imports</li>
<li>Improving expectations in the West (vaccine/stimulus package)</li>
</ul>
<p><strong>Factors that could explain decrease in CPI</strong></p>
<ul>
<li>central bank liquidity tightening</li>
<li>aggregate demand &lt; productive capacity</li>
<li>weakening sentiment</li>
</ul>
<h2>Question</h2>
<p>What is the standard interpretation of diverging price indicators? What I gathered thus far, is that there are a multitude of possible explanations, and I'm having trouble knowing what to pay closer attention to to accomplish my task of explaining the divergence.</p>

CC BY-SA 4.0
2021-03-14T10:47:20.850Z
Welcome to Economics:SE. Thank you for your question; please consider revising it to be more in line with our community expectations. Like many other stacks, [we expect questions to provide evidence of prior research](https://economics.stackexchange.com/help/how-to-ask). That helps us to understand the question, and avoids our repeating work you've already done. Our [help center](https://economics.stackexchange.com/help), and [other stacks](https://interpersonal.meta.stackexchange.com/questions/3224/how-do-i-write-a-good-question) provide additional resources to assist with revisions.
1muflon1
CC BY-SA 4.0
2021-03-15T08:18:18.540Z
@1muflon1 I appreciate the enthusiastic welcome, but I have several 'yearling' badges... also the inclusion of the tag `nonexpert`... oh the truth hurts...
Arash Howaida
CC BY-SA 4.0
2021-03-15T08:22:22.383Z
I know that is just generic message because it is too time consuming to write personalized message every time and also policies of SE evolve so you might not be aware of the new one. In addition, the nonexpert tag is not supposed to ‘hurt’ and **it does not apply to you as person but to the contents of question** (see tag for exact definition of which questions it applies to). In addition, nonexpert tag is used for Q that fall into clear and objective criteria set in the tag is one of the new rules of Economics.se, **the tag has crystal clear criteria** so it is not about my opinion of the Q.
1muflon1
CC BY-SA 4.0
2021-03-15T08:23:29.550Z
Also please consider adding references to those previous research findings (e.g. where you found that?)
1muflon1
<macroeconomics><inflation><price><nonexpert>
diverging price indicators
Arash Howaida
# diverging price indicators

(Asked by: username_0 on 2021-03-14)

Suppose that PPI is increasing while CPI is decreasing. interpereting this is somewhat tricky because different contexts are at play: CPI is largely domestic driven while PPI has global determinants.

Here is an overview of my research findings:

Assuming perspective of the general, Asian economy:

**Factors that could explain increase in PPI**

* central bank liquidity tightening
* currency appreciation
* reducing reliance on imports
* Improving expectations in the West (vaccine/stimulus package)

**Factors that could explain decrease in CPI**

* central bank liquidity tightening
* aggregate demand < productive capacity
* weakening sentiment

## Question

What is the standard interpretation of diverging price indicators? What I gathered thus far, is that there are a multitude of possible explanations, and I'm having trouble knowing what to pay closer attention to to accomplish my task of explaining the divergence.

**Tags:** macroeconomics, inflation, price, nonexpert

> **Comments:**
> **username_1**: Welcome to Economics:SE. Thank you for your question; please consider revising it to be more in line with our community expectations. Like many other stacks, [we expect questions to provide evidence of prior research](https://economics.stackexchange.com/help/how-to-ask). That helps us to understand the question, and avoids our repeating work you've already done. Our [help center](https://economics.stackexchange.com/help), and [other stacks](https://interpersonal.meta.stackexchange.com/questions/3224/how-do-i-write-a-good-question) provide additional resources to assist with revisions.  
> **username_0**: @username_1 I appreciate the enthusiastic welcome, but I have several 'yearling' badges... also the inclusion of the tag `nonexpert`... oh the truth hurts...  
> **username_1**: I know that is just generic message because it is too time consuming to write personalized message every time and also policies of SE evolve so you might not be aware of the new one. In addition, the nonexpert tag is not supposed to ‘hurt’ and **it does not apply to you as person but to the contents of question** (see tag for exact definition of which questions it applies to). In addition, nonexpert tag is used for Q that fall into clear and objective criteria set in the tag is one of the new rules of Economics.se, **the tag has crystal clear criteria** so it is not about my opinion of the Q.  
> **username_1**: Also please consider adding references to those previous research findings (e.g. where you found that?)  

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## 0 answers

