I was reading through some econ articles and there was much discussion on various measures of inflation. Though I'm not narrowing the scope to this article, I'll include the excerpt here for context:
The GDP deflator-- the difference between the headline growth rate (adjusted for inflation) and the nominal growth rate (unadjusted for inflation) -- usually falls somewhere between the consumer price index and the producer price index.
The part where it says "usually falls somewhere between CPI and PPI" got the wheels turning in my head. What I (hopefully) correctly understand is that prices do not increase or decrease universally throughout the economy, hence inflation measures (CPI,PPI,ect) could diverge.
What I seem to have trouble building an intuition with is exactly what implications are supposed to jump to mind by looking at a spread of inflation indices. Consider this graph:
What is the the significance of diverging inflation measures? Initially, I thought it might be suggestive that one part of the economy is performing differently than another, but I'm not sure that's always true, and it doesn't seem that useful either. So I'm hoping someone can help me connect the dots in a more meaningful way.