Wholesale Price Index
- Context: The Ministry of Commerce and Industry has released a new series of the Wholesale Price Index (WPI) with an updated base year of 2022-23.
- The revised WPI has a broader coverage of goods and aligns with global best practices and IMF recommendations.
- Wholesale inflation rose to 9.7% in May 2026, the highest since April 2024, mainly due to rising prices of crude oil, natural gas, mineral oils, and manufactured products.
- Historical comparison beyond April 2024 is unavailable because of the change in the base year.
- Alongside the WPI, the government introduced:
- Output Producer Price Index (OPPI),
- Trial Input Producer Price Index (IPPI), and
- Service Producer Price Index (Service PPI).
- The Service PPI currently covers seven sectors:
- Banking,
- Securities Transactions,
- Insurance,
- Pension Fund Management,
- Railways,
- Passenger Air Transport, and
- Telecommunications.
- The government announced that the Producer Price Index (PPI) will gradually replace the WPI over the next five years.
- WPI will continue to be published during the transition period because of its extensive use in price escalation clauses and contracts.
- The shift from WPI to PPI is consistent with practices followed by advanced economies and recommended by the International Monetary Fund (IMF).
- The sharp increase in wholesale inflation in May 2026 was largely caused by the West Asia crisis, which pushed up global fuel prices.
- Inflation in the crude oil and natural gas category rose to 61.5% in May 2026, compared with 56.3% in April.
- Inflation in the mineral oils category accelerated to 49.8% from 40.7% in the previous month.
- Inflation in the manufacturing and food sectors also increased, though at a slower pace than fuel-related categories.
Wholesale Price Index (WPI)
About
- The Wholesale Price Index (WPI) is an important macroeconomic indicator that tracks the average movement in the prices of commodities sold in bulk at the wholesale stage.
Key Features
- Goods-Oriented Index: WPI captures changes in the prices of physical commodities only and does not include services such as healthcare, education, and telecommunications.
- Measures Producer-Level Prices: It reflects prices at the first point of transaction (wholesale/producer level) and is therefore a useful measure of supply-side inflation.
- Base Year: The updated WPI series adopts 2022–23 as the base year (100) for calculating price variations.
Major Components of WPI
- Manufactured Products (Largest Weight):
- Comprises items such as processed food products, textiles, chemicals, machinery, metals, and other industrial goods.
- Primary Articles:
- Includes raw and unprocessed commodities like cereals, vegetables, oilseeds, and minerals.
- Fuel and Power:
- Covers energy-related products including coal, petroleum products, natural gas, and electricity.
Producer Price Index (PPI)
About
- The Producer Price Index (PPI) gauges the average variation over time in the prices that domestic producers obtain for the goods and services they supply.
- It measures inflation from the producer’s viewpoint, recording price movements before they are passed on to consumers.
- Unlike the Consumer Price Index (CPI), which reflects the prices paid by consumers, the PPI captures the prices received by manufacturers and service providers.
- The PPI acts as an early signal of inflationary trends and helps analyse how changes in production and input costs influence the prices of final products and services.
