Govt rolls out Producer Price Index for goods and services; WPI to be phased out over five years

New Delhi: The government on Monday came out with producer price index (PPI) data for both goods and services for the first time to better reflect price movement, paving the way for phasing out wholesale price inflation numbers in the next five years.

This is in line with practices adopted by advanced economies and the recommendations of the International Monetary Fund (IMF), which stressed that there is a growing need for India to transition from the wholesale price index (WPI) to the Producer Price Index (PPI).

Availability of both output and input PPI would give a better understanding of the price movements of output items vis-a-vis input items being used in an industry.

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"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.

All India Output PPI for all commodities for May 2026 stands at 109.6, whereas it was 108.6 in April 2026.

All-India trial Input PPI for the manufacturing sector in May 2026 stands at 104.9.

The ministry said the input PPI is being published on an experimental basis and would enable the department to examine the data quality and also receive feedback of stakeholders and users.

Along with the May WPI data, the government on Monday released the output and input PPIs for the first time. In line with the WPI inflation, which increased to 9.68 per cent in May from 8.26 per cent in April, the output PPI increased to 9.4 per cent in May from 8.1 per cent in April.

The revised base year for both WPI and PPI data is 2022-23 and includes 957 items.

The ministry said the revised series of WPI and Output PPI (Goods) cover all representative goods transacted in the economy, whereas Input PPI (Goods) covers all representative goods consumed by the manufacturing industry.

Seven services -- banking, securities transaction, insurance, management of pension funds, railways, air (passenger), and telecom -- have been covered in the first phase of Service PPI, while remaining services will be covered in the next phase, which would use the data collected through price collection survey of sampled establishments, obtained from GSTN, the Commerce and Industry Ministry said.

Manufactured items have the highest 69.93 percent weight in output PPI (Goods), followed by agriculture, forestry and fishing (22.16 percent), electricity (4.49 percent), and mining and quarrying (3.42 percent).

In the case of Service PPI, no weights are being assigned, since the seven services are not covering the entire service sector. Accordingly, indices of the seven services would be released without their respective weights.

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This compares to WPI weightage of 63.12 per cent for manufactured products, 14.11 per cent for fuel and power, and 22.76 per cent for primary articles.

The shift from WPI to PPI follows the submission of the report of the working group under former NITI Aayog member Ramesh Chand in April. The group was set up on December 30, 2024, with the mandate to revise the base year of the WPI from 2011-12 to 2022-23, and compile the PPI with 2022-23 as the base year.

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"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.

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