Context:
India is launching a new Producer Price Index (PPI) framework and a revamped Wholesale Price Index (WPI) series on June 15, 2026. The Department for Promotion of Industry and Internal Trade (DPIIT) announced that both metrics will shift to an updated 2022-23 base year, replacing the previous 2011-12 benchmark.
Explanation:
- The government plans to run WPI and PPI simultaneously for five years, after which the WPI will be fully discontinued by 2031.
- The new series will include Output PPI, Trial Input PPI and Services PPI to provide a more realistic picture of price movements in the economy.
- Wholesale Price Index measures price changes at the wholesale level and is currently used for inflation tracking and price escalation clauses.
- Producer Price Index measures price changes from the producer’s point of view and is considered closer to global inflation measurement practices.
- Output PPI tracks prices received by producers for goods and services they sell.
- Input PPI tracks prices paid by producers for raw materials and intermediate inputs.
- Comparing input and output prices helps understand how cost-push inflation is transmitted through production chains.
- Services PPI will initially cover sectors such as banking, insurance, securities transactions, pension fund management, railways, air passenger services and telecom.
- PPI aligns with international best practices and IMF recommendations.
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