Transition from WPI to PPI Context:The Central Government has decided to gradually replace the Wholesale Price Index (WPI) with the Producer Price Index (PPI) over the next five years. The move aims to provide a more accurate picture of inflation trends in the economy. Revised WPI Series The Department for Promotion of Industry and Internal Trade (DPIIT) will release a revised WPI series on 15 June. New Base Year: 2022–23. It will replace the existing WPI series with base year 2011–12. Introduction of Producer Price Index (PPI) A new Producer Price Index (PPI) series will also be launched on 15 June. PPI will include: Output PPI, Input PPI (Trial), Services PPI. Initially, Services PPI will cover seven sectors: Banking ,Securities Transactions, Insurance, Pension Fund Management, Railways, Air Passenger Transport, Telecommunications Reason-WPI Being Phased Out WPI is widely used in price escalation clauses and contracts. Therefore, it will continue to be published alongside PPI for five years. After the transition period, WPI is expected to be discontinued and replaced by PPI. Advantages of PPI Provides a more comprehensive measure of producer-level inflation. Tracks prices of both inputs and outputs. Helps understand how increases in input costs are passed on to final products. Includes services sector inflation, which is not adequately captured by WPI. Alignment with Global Standards The shift from WPI to PPI follows international best practices. It is in line with recommendations of the International Monetary Fund (IMF). Many advanced economies already use PPI as a key inflation indicator. Data Release Schedule WPI and Output PPI will be compiled and released every month.
