India Introduces Producer Price Index, Plans to Phase Out Wholesale Inflation Gauge in Five Years
India has officially launched its Producer Price Index (PPI) data for goods and services, marking a significant shift from the traditional Wholesale Price Index (WPI). This transition, reported by PTI, is set to phase out the WPI over the next five years, aligning with practices in advanced economies and recommendations from the International Monetary Fund (IMF).
The government released both output and input PPIs alongside the May wholesale inflation data. The Commerce and Industry Ministry stated that this new data will help clarify how inflation affects producers, particularly regarding input costs and their impact on output prices. The WPI will be discontinued after five years, as part of this transition.
The All-India Output PPI for all commodities was recorded at 109.6 in May 2026, up from 108.6 in April 2026. The All-India trial Input PPI for the manufacturing sector stood at 104.9 in May 2026. The ministry noted that the input PPI is currently published on an experimental basis to evaluate data quality and gather feedback from stakeholders.
In May, wholesale inflation rose to 9.68%, up from 8.26% in April, while output PPI inflation increased to 9.4% from 8.1%. The revised base year for both WPI and PPI is set at 2022-23, encompassing 957 items. The revised WPI and Output PPI series reflect representative goods in the economy, while the Input PPI focuses on goods consumed by the manufacturing sector.
The first phase of the Service PPI includes sectors such as banking, insurance, and railways, with plans to expand coverage in subsequent phases. In the Output PPI, manufactured items hold the highest weight at 69.93%, followed by agriculture at 22.16%. In contrast, the WPI weights are 63.12% for manufactured products and 22.76% for primary articles.
This transition follows a report submitted in April by a working group led by former NITI Aayog member Ramesh Chand, which recommended updating the WPI base year and establishing a PPI series. Chand emphasized that the PPI offers a more accurate measure of price changes from the producers’ perspective, enhancing its relevance for national accounts and GDP calculations. The data was released by the commerce and industry ministry.
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