New Delhi (India), June 2: In a major overhaul of India's inflation measurement system, the government has set the stage for a gradual transition from the Wholesale Price Index (WPI) to the Producer Price Index (PPI), marking one of the most significant changes in economic statistics in recent years.
While the government has approved a new WPI series with base year 2022-23, the bigger development is that the existing wholesale inflation gauge will continue for only five years before being discontinued, giving businesses, industries and government agencies time to shift to the internationally accepted Producer Price Index framework.
The revised WPI series and the new PPI series will be released on June 15, 2026.
What Is Changing?
For decades, WPI has served as India's primary measure of wholesale inflation and has been widely used in government contracts, price escalation clauses and industrial cost calculations.
However, the Department for Promotion of Industry and Internal Trade (DPIIT) has now introduced:
Output Producer Price Index (OPPI)
Trial Input Producer Price Index (IPPI)
Service Producer Price Index (PPI)
The move aligns India's inflation measurement system with practices followed by many advanced economies and recommendations from the International Monetary Fund (IMF).
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Why Is India Moving From WPI to PPI?
The key difference is that WPI tracks wholesale price movements of commodities, while PPI measures prices received and paid by producers across the economy.
Economists often consider PPI a more comprehensive indicator because it captures both input costs and output prices, helping policymakers and businesses understand how inflation moves through supply chains.
For example, rising raw material costs can be tracked through Input PPI, while changes in prices charged by manufacturers can be tracked through Output PPI.
This makes it easier to measure how inflationary pressures are transmitted from producers to consumers.
What Will Businesses Gain?
The introduction of Input and Output PPIs will provide a clearer picture of industrial cost structures.
Manufacturers will be able to track:
Changes in raw material costs
Impact on production expenses
Pass-through of inflation to final products
Sector-specific pricing trends
The government says the new framework will improve inflation analysis and provide better data for businesses, policymakers and investors.
Services Sector Gets Inflation Tracking for the First Time
One of the biggest changes is the introduction of Service Producer Price Indices.
Initially, seven service sectors will be covered:
Banking
Securities transactions
Insurance
Pension fund management
Railways
Air passenger transport
Telecommunications
This is significant because India's services sector accounts for more than half of the country's economic output, yet inflation tracking has historically focused heavily on goods.
More service sectors are expected to be added in future phases.
What's New in the Revised WPI?
Even as India prepares for a PPI-based future, the new WPI series introduces major methodological changes.
The revised index:
Expands coverage from 697 items to 957 items.
Includes solar, wind and nuclear power in the electricity basket.
Shifts crude petroleum and natural gas to the Fuel and Power category.
Uses Gross Value of Output (GVO) for assigning weights.
Adopts chain-based index calculation methods.
Introduces targeted mean imputation for missing price data.
These changes are designed to make the index more representative of the modern Indian economy.
When Will WPI Be Phased Out?
The government has clarified that both WPI and PPI will run simultaneously for five years.
This transition period is intended to allow businesses, industries and government agencies that rely on WPI-linked contracts to adjust smoothly before the wholesale index is eventually discontinued.
Why This Matters
The shift from WPI to PPI represents more than a statistical revision. It signals India's effort to modernise its inflation measurement architecture and align with global standards.
For businesses, it could mean better visibility into supply-chain costs. For policymakers, it provides more detailed inflation diagnostics. For investors and economists, it offers a more accurate picture of price pressures across goods and services.
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The June 15 rollout will therefore mark not just a new base year for inflation data, but the beginning of India's transition to a new framework for measuring producer prices.
Ends.
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