India launches producer price index; wholesale inflation gauge to be phased out in five years

India on Monday released producer price index (PPI) data for goods and services for the first time, paving the way for the gradual replacement of the wholesale price index (WPI), which will be discontinued over the next five years, PTI reported.The move is in line with practices followed by advanced economies and recommendations of the International Monetary Fund (IMF), which has highlighted the need for India to transition from WPI to PPI.Along with the May wholesale inflation data, the government released output and input PPIs for the first time."It also explains how inflation experienced by producers on input items is passed through the output being produced," the Commerce and Industry Ministry said, adding that the release of WPI index would be discontinued after 5 years.The ministry said the availability of both output and input PPIs would provide a better understanding of price movements in output items as well as the inputs used by industries.All-India Output PPI for all commodities stood at 109.6 in May 2026, compared with 108.6 in April 2026.The All-India trial Input PPI for the manufacturing sector stood at 104.9 in May 2026.The ministry said the input PPI is being published on an experimental basis to assess data quality and obtain feedback from stakeholders and users.

In line with the increase in wholesale inflation to 9.68% in May from 8.26% in April, output PPI inflation rose to 9.4% from 8.1% during the same period.The revised base year for both WPI and PPI is 2022-23 and covers 957 items.According to the ministry, the revised WPI and Output PPI (Goods) series cover representative goods transacted in the economy, while Input PPI (Goods) covers representative goods consumed by the manufacturing sector.In the first phase, Service PPI covers banking, securities transactions, insurance, pension fund management, railways, air passenger transport and telecom services. The remaining services will be covered in the next phase using data collected through price surveys and GSTN.Manufactured items carry the highest weight of 69.93% in Output PPI (Goods), followed by agriculture, forestry and fishing at 22.16%, electricity at 4.49%, and mining and quarrying at 3.42%.For Service PPI, no weights have been assigned because the seven services do not yet cover the entire services sector.This compares with WPI weights of 63.12% for manufactured products, 14.11% for fuel and power, and 22.76% for primary articles.The transition follows the submission in April of a report by a working group headed by former NITI Aayog member Ramesh Chand. The panel was tasked with revising the WPI base year from 2011-12 to 2022-23 and compiling a PPI series with 2022-23 as the base year."Unlike WPI, the PPI-- comprising a set of indicators such as Output PPI (Goods) and Services PPI -- provides a more accurate measure of price changes from producers' perspective, thereby enhancing its suitability for use in National Accounts/GDP compilation and estimation of real value addition," Chand said in the report.The data was released by the commerce and industry ministry.