India to unveil revised WPI, producer price indices on June 15 | Today’s news
New Delhi: This month, the government will introduce a revised wholesale price index (WPI) with a new base year of 2022-23 and introduce a new set of producer price indices (PPI), marking a major overhaul of the way producer inflation is measured in India. The changes widen the commodity basket, update the weighting and calculation methodology and bring India’s inflation framework more in line with global practice.
According to the statement of the Department for the Support of Industry and Internal Trade (DPIIT) on Tuesday, the revised WPI series with base year 2022-23 will replace the 2011-12 series. The Office of the Economic Adviser will release a new series on June 15.
In addition to the revised WPI, the government will also release a new Producer Price Index (OPPI), trial Input Producer Price Index (IPPI) and Service Producer Price Indices for seven services – banking, securities transactions, insurance, pension fund management, railways, air passenger transport and telecommunications.
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The government said the existing WPI will continue to be published for five years alongside the PPI as it is widely used in price escalation clauses. It will then be discontinued, giving users time to transition to the PPI framework.
“The shift from WPI to PPI is in line with global best practices adopted by advanced economies and the recommendations of the International Monetary Fund (IMF),” the statement said.
The revision and compilation methodology was approved by the competent authority on May 25. The methodology was previously approved by the Technical Advisory Committee for Price and Cost of Living Statistics and subsequently submitted to the National Statistical Commission.
What is changing
Under the revised WPI series, the number of commodities covered has increased to 957 from the earlier 697. The basket has also been expanded to include solar, wind and nuclear electricity under the electricity group.
In another structural change, oil and natural gas were moved from the “Primary Products” category to the “Fuel and Energy” group. The government said the adjustment will improve alignment with other major fuels such as coal, electricity and petroleum products.
The revised index will also bring changes in the methodology. Weights will now be based on gross value of output (GVO), replacing the net traded value approach used in the 2011–12 series. According to the government, weights based on GMOs better reflect the economic importance of commodities from the perspective of the producer.
Elementary indexes will be built using a short-term string formulation instead of the previously used long-term formulation. For missing price data, the new series will adopt a “Targeted Mean Imputation” method to replace the existing carryover approach.
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The government has calculated the coupling factor based on the ratio of the geometric averages of the 12-month indices of the old and new WPI series for 2024-25. The coupling factor will be available for all commodities and major groups.
Revised WPI and Output PPI will be released monthly starting with preliminary data for May 2026, along with a back series from April 2023 to April 2026. Trial input PPI for production will be released monthly on an experimental basis from March 2026 to facilitate data quality assessment and stakeholder feedback.
Service PPIs, which will be published quarterly, will be published for the fourth quarter of 2025-26, along with back-series data from the first quarter of 2023-24 to the third quarter of 2025-26.
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The government said the weights for Output PPI and Input PPI were derived using the supply and use tables from the 2022-23 National Accounts supply and use tables.
While WPI, Output PPI and Service PPI are compiled based on basic prices, net of taxes and trade and transport margins, Input PPI will be compiled using purchase prices as industries obtain market inputs.
“This revision will ensure that newer products are captured in the index,” said Gaura Sengupta, chief economist at IDFC First Bank. “Interestingly, services inflation will also be captured at the producer level, which was previously only captured at the consumer level.”
