In a major overhaul of India’s inflation measurement system, the government will begin rolling out a new Producer Price Index (PPI) framework from June 15, gradually replacing the Wholesale Price Index (WPI) over the next five years. The move is aimed at modernising the country’s pricing data system and aligning it with global best practices.
The Department for Promotion of Industry and Internal Trade (DPIIT) will release a revised WPI series with a new base year of 2022-23, replacing the current 2011-12 series. Alongside it, the government will introduce new Producer Price Indices, including the Output Producer Price Index (OPPI), Trial Input Producer Price Index (IPPI) and Service Producer Price Index (Service PPI).
Unlike the WPI, which primarily tracks the prices of goods at the wholesale level, the PPI will provide a more comprehensive view of producer-level inflation by covering output prices, input costs and selected services. Initially, the services index will cover sectors such as banking, insurance, securities transactions, pension fund management, railways, air passenger transport and telecommunications.
To ensure a smooth transition, both WPI and PPI will be published simultaneously for five years. The WPI will then be phased out, giving businesses and institutions adequate time to shift to the new system. The government noted that WPI remains widely used in contracts and price-escalation clauses, making a gradual transition necessary.
The revised WPI series will also feature an expanded basket of items, increasing coverage from 697 to 957 products. The update includes emerging sectors and newer economic activities, making the index more representative of the current economy.
Officials believe the new framework will help policymakers, businesses and economists better understand inflation trends across different stages of production. By tracking changes in production costs earlier in the supply chain, the PPI is expected to offer a more accurate picture of price pressures in the economy.