New Delhi, June 2: The government will phase out the Wholesale Price Index (WPI) over the next five years while simultaneously introducing a more detailed Producer Price Index (PPI), covering output, input and services prices, in a bid to offer a more realistic assessment of inflationary trends in the economy.
Speaking with reporters, Praveen Mahto, Principal Economic Adviser in the Commerce and Industry Ministry, said that the Department for Promotion of Industry and Internal Trade (DPIIT) will release the revised series of WPI with new base year 2022-23 on June 15, which would replace the existing series with base year 2011-12.
In addition, the department would release a new series of PPI from June 15. It will have three indices – Output PPI, Trial Input PPI and Services PPI.
Initially, services PPI will have seven services – Banking, Securities Transaction, Insurance, Management of Pension Funds, Railways, Air (Passenger), and Telecom.
“Considering the wide usage of WPI in price escalation clauses, this index will be released for five years from the date of release of the revised series along with PPI and will be discontinued thereafter,” the ministry said in a statement.
The five-year period would give users sufficient time to switch from WPI to PPI.
Mahto said that after five years, the PPI is expected to replace WPI.
The transition from WPI to PPI aligns with global best practices adopted by advanced economies and the recommendations of the International Monetary Fund (IMF).
The availability of both Output PPI and Input PPI provides a better understanding of the price movements of output items vis-a-vis the input items used in an industry. (PTI)
