Final answer:
b) Producer Price Index (PPI)
The Producer Price Index (PPI) is commonly used to give an indication of future inflation as it reflects changes in production costs that may be passed to consumers. The Consumer Price Index (CPI) and Core Inflation are other measures of inflation that track changes in the cost of living and exclude volatile prices, respectively. The Bureau of Labor Statistics ensures the accuracy of the CPI by updating the consumer basket and adjusting for new good and quality changes.
Step-by-step explanation:
The measurement of inflation that helps to give an indication of future inflation is the Producer Price Index (PPI). The PPI measures the average changes in prices received by domestic producers for their output and is a leading indicator because it can signal increasing costs that producers may pass on to consumers in the future. The Consumer Price Index (CPI) is often considered the most accurate measure of inflation as it impacts households, tracking the changes in the cost of a basket of goods and services purchased by households. Core Inflation is a measure that excludes volatile items like food and energy prices from the CPI to provide a clearer trend of inflation. The GDP deflator encompasses the prices of all domestically produced goods and services and reflects the prices of the entire gross domestic product. Statisticians at the Bureau of Labor Statistics (BLS) ensure the CPI remains a relevant and nuanced measure by attending to substitution bias through the periodic updating of the consumer basket and by adjusting for quality improvements and the introduction of new goods.