Do producer prices predict consumer prices?

There has been a persistent curiosity about the predictability of consumer price inflation by looking at the pass-through effect of prices from earlier stages of production. The theory is that the prices of consumer items, particularly goods, respond to cost pressures from the inputs to production. This paper examines in particular a limited portion of the value chain, namely the predictive power of producer prices of goods as measured by the Industrial Product Price Index (IPPI) on consumer prices, as measured by the Consumer Price Index (CPI).