Compared with PPI, CPI is a lagging indicator. However, PPI has a certain transmission effect on CPI, which comes from two aspects: first, the change of the ex-factory price of living materials directly affects the change of CPI; Second, changes in the ex-factory price of raw materials directly cause changes in the cost of raw materials and consumer goods, and indirectly affect changes in CPI. For example, the price increase of petroleum will lead to the price increase of petrochemical products, which will lead to the price increase of chemical fiber, which in turn will lead to the increase of textile and clothing costs, thus pushing up the price of consumer goods. Therefore, in most cases, the trend direction of CPI and PPI is the same.

The influence of PPI on CPI is mainly realized through the purchasing cost of the affected enterprises. The purchasing cost is restricted by various environmental factors, and the national policy regulates some key prices, so this influence is uncertain. In addition, because the investigation contents of PPI and CPI are obviously different, it will also lead to the inconsistency between PPI and CPI. For example, because of the consumption structure, food prices have a great weight in the composition of CPI in China, while food weights are relatively small in the composition of PPI, while energy and raw materials account for a large proportion. This difference in content will also lead to differences or even deviations between CPI and PPI.

The phenomenon of scissors difference (upside down) between PPI and CPI in China began in May 2008. In May, PPI rose by 8.2% year-on-year, and CPI rose by 7.7%. In this round of price increase, PPI exceeded CPI by 0.5 percentage points for the first time, by 1.7 percentage points in June, by 3.7 percentage points in July, and by 5.2 percentage points in August. The inversion of CPI and PPI indicates that the gross profit margin of manufacturing enterprises is further compressed, and the downward trend of corporate profits is difficult to see an inflection point in the short term, and the future performance is not optimistic.