Context: Govt. to replace Wholesale Price Index with Producer Price Index
India is modernising its inflation and economic statistics framework. The Wholesale Price Index base year has been revised from 2011–12 to 2022–23, while a new Producer Price Index has been introduced. WPI and PPI will run simultaneously for five years before PPI gradually replaces WPI.
Wholesale Price Index and Producer Price Index
Wholesale Price Index
- Measures inflation at the wholesale level.
- Covers goods only.
- Compiled by the Office of Economic Adviser, Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry.
Changes in WPI
- Base year revised from 2011–12 to 2022–23.
- Basket expanded from 697 to 957 items.
- Solar, wind and nuclear electricity added.
Producer Price Index
- Measures inflation from the producer’s perspective by tracking input costs, output prices and services.
Key Features of PPI
- Output Producer Price Index: Prices received by producers.
- Input Producer Price Index: Prices paid for raw materials and inputs.
- Services Producer Price Index: Measures services inflation.
- Covers services for the first time and aligns India with global best practices recommended by the IMF.
WPI vs CPI
Wholesale Price Index
- Wholesale prices
- Goods only
- Lower food weight
- Services excluded
- Retail prices
- Goods + services
- Higher food weight
- Used by the Reserve Bank of India for inflation targeting
PYQ Link, 2020
- Food weight is higher in CPI.
- WPI excludes services.
Recent Base-Year Revisions
Consumer Price Index
- Base year: 2024
- Earlier base year: 2012
- Compiled by National Statistics Office, Ministry of Statistics and Programme Implementation
- Base year: 2022–23
- Earlier base year: 2011–12
- Estimated by National Statistics Office, Ministry of Statistics and Programme Implementation
Index of Industrial Production
- Base year: 2022–23
- Earlier base year: 2011–12
- Compiled by National Statistics Office, Ministry of Statistics and Programme Implementation
