India Introduces Producer Price Index to Replace WPI

The Indian government has officially introduced the Producer Price Index (PPI) data for goods and services as of June 15, 2026. This initiative marks a significant shift in how the country measures price movements, with plans to phase out the Wholesale Price Index (WPI) over the next five years.

The transition aligns with recommendations from the International Monetary Fund (IMF) and practices observed in advanced economies. The Commerce and Industry Ministry stated that adopting the PPI will enhance understanding of price structures within industries.

A report from the ministry highlighted that the availability of both output and input PPI data offers insights into the price dynamics of products relative to their input costs. It noted, "It also explains how inflation experienced by producers on input items is passed through to the output being produced."

As part of the initial findings, the All India Output PPI for May 2026 was recorded at 109.6, an increase from April's figure of 108.6. Meanwhile, the input PPI for the manufacturing sector was reported at 104.9. The publication of the input PPI is currently experimental, allowing for quality assessments and feedback collection from stakeholders.

With this change, the government plans to cease the release of WPI data after the transition period. For context, WPI inflation rose to 9.68% in May from 8.26% recorded in April, while the output PPI saw an increase to 9.4% in May from 8.1% in April.

Both WPI and PPI data have been revised using 2022-23 as their base year, encompassing 957 items in total, providing a comprehensive view of price trends in the economy. The output PPI primarily reflects manufactured goods, which carry a weight of 69.93%. Other contributors include agriculture, forestry and fishing at 22.16%, electricity at 4.49%, and mining and quarrying at 3.42%.

In the first phase of PPI for services, seven sectors have been included: banking, securities transactions, insurance, pension fund management, railway transport, air passenger transport, and telecommunications. The broader service sector will be incorporated in subsequent phases through a data collection exercise involving sampled establishments.

The transition from WPI to PPI follows the completion of a report by a working group led by former NITI Aayog member Ramesh Chand. The group was tasked with updating the WPI's base year and developing the PPI, emphasising the need for a more accurate gauge of price changes from a producer's perspective. "Unlike WPI, the PPI provides a more accurate measure of price changes, enhancing its suitability for National Accounts and GDP calculations," Chand stated in the report.

With this new approach, India's economic data will seek to provide more relevant and up-to-date insights, reflecting current market conditions and trends.