India to Replace WPI with PPI: Key Changes, Benefits and Significance

India is introducing the Producer Price Index (PPI) alongside the revised WPI series from June 15, 2026. Learn its features, components, and significance for inflation measurement.

Table of Contents

Context

The Centre announced phasing out of the Wholesale Price Index (WPI) over the next five years, replacing it with the Producer Price Index (PPI) for a more realistic assessment of inflationary trends.

WPI to PPI transition

WPI new series (base year 2022-23) releases on June 15, 2026, replacing old 2011-12 series
PPI new series also launches on June 15, 2026 simultaneously
WPI will continue for 5 years alongside PPI, gives users time to switch from WPI to PPI
WPI currently embedded in price escalation clauses in contracts, 5-year window allows smooth transition
After 5 years, PPI will fully replace WPI

About PPI

Producer Price Index (PPI) measures price changes at the producer/factory gate level, capturing prices before goods and services reach the wholesale or retail market.
Compiled by DPIIT under the Ministry of Commerce & Industry.
Base year: 2022–23
Components:
- Output PPI: Price changes of goods/services produced (at factory gate)
- Input PPI (Trial) : Price changes of raw materials/inputs used in production
- Services PPI: Price changes in service sectors
  - Banking, Securities Transaction, Insurance, Management of Pension Funds, Railways, Air (Passenger), Telecom

Why PPI is better than WPI

WPI covers only goods; PPI covers goods and services
PPI captures both output and input price movements
Gives better understanding of producer-level inflation transmission
Aligns India with advanced economies and IMF standards

Wholesale Price Index (WPI)

● Definition: WPI measures the average change in prices of a fixed basket of goods at the wholesale (bulk-sale) level in the domestic market over a period of time.

● Released by: Office of the Economic Adviser (OEA) under the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry.

Key Changes in the Revised WPI Series

● New Base Year: Revised from 2011–12 to 2022–23.

● Broader Coverage: Number of items increased from 697 to 957, improving representation of the economy.

● Rationalised Energy Basket:

○ Solar, wind and nuclear energy are included under the electricity category.

○ Crude petroleum and natural gas shifted to the Fuel & Power group.