Producer price index to replace WPI in India, with revised 2022-23 base year

The government has decided to gradually replace the Wholesale Price Index (WPI) with a Producer Price Index (PPI). The change aims to give a more realistic reading of inflation trends. The planned PPI will track prices for output, inputs, and services. The move also links India’s producer inflation measures more closely with global statistical practices.

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Alongside the shift, the government has updated the WPI base year to 2022-23 from 2011-12. The Office of Economic Adviser under the Department for Promotion of Industry and Internal Trade (DPIIT) will release the revised WPI series on June 15. The new series will replace the current WPI series that uses 2011-12.

Wholesale Price Index WPI and Producer Price Index PPI: why the shift matters

The PPI is described as more consistent with the National Accounts framework than WPI. It is also aligned with practices used in advanced economies. Officials said PPI can reduce double counting of inflation that may occur in WPI. Another key change is coverage, since PPI includes services while WPI covers only goods.

The government also pointed to how PPI splits producer inflation into two linked measures. Output PPI and Input PPI can show how higher input costs affect output prices. This structure helps track how inflation pressure moves through production stages. It also supports a clearer view of cost pass-through faced by producers.

Wholesale Price Index WPI and Producer Price Index PPI: transition plan and timeline

The government said WPI is widely used in price escalation clauses. Because of that, the revised WPI with the new base year will continue for five years from release. It will be published alongside PPI during that period. After five years, WPI will be discontinued to allow users time to shift.

The transition from WPI to PPI is stated to match global practices and International Monetary Fund (IMF) recommendations. Officials said the overlap period is meant to reduce disruption for contracts and users. During the switch, both indices will be available for comparison. This is expected to help users understand differences in coverage and method.

Wholesale Price Index WPI and Producer Price Index PPI: how concepts and weights differ

In India, WPI is similar to Output PPI because both use prices received by producers. However, the weighting approach differs. WPI weights come from Gross Value of Output estimates in National Accounts at broad sector level. Output PPI weights instead use the Supply Table of National Accounts.

Input PPI differs from WPI due to the price concept used. WPI is based on the Basic Price. Input PPI uses the purchasers price. This change affects how taxes and margins are treated in the index, and it changes what is measured for inputs bought by producers.

Output PPI is compiled using prices received by the producer, called the Basic Price. This price does not include net tax, trade margin, or transport margin. Input PPI is compiled using prices paid by producers for input items. This purchasers price includes trade and transport margin, which changes the measured input cost.

Wholesale Price Index WPI and Producer Price Index PPI: services coverage and release schedule

The government plans a separate services PPI to widen coverage beyond goods. It will be released quarterly, with the schedule being finalised with the Ministry of Statistics and Programme Implementation. The initial services set will cover seven areas. These are Banking, Securities Transaction, Insurance, Management of Pension Funds, Railways, Air Passenger and Telecom.

Officials said the phased approach is designed to keep existing users supported while expanding measurement. The June 15 WPI revision starts the base-year update and prepares for the wider PPI system. Over time, the combined output, input, and services PPIs are intended to provide more complete price signals. The five-year overlap keeps continuity for current WPI-based uses.

With inputs from PTI