THEBUSINESSBYTES
BUREAU
NEW DELHI, JUNE 15, 2026
In a significant step
towards strengthening India’s economic data architecture, the Department for
Promotion of Industry and Internal Trade (DPIIT) on Monday launched a revamped
inflation measurement framework by introducing a revised Wholesale Price Index
(WPI) series with 2022-23 as the new base year, alongside new Producer Price
Indices covering output, input and selected services sectors.
The move marks a
major shift in India’s approach to tracking price movements across the economy
and aligns the country’s statistical system with international best practices
recommended by the International Monetary Fund (IMF). The Office of the
Economic Adviser said the transition is aimed at creating a more comprehensive
and contemporary framework for measuring producer-level inflation.
While the revised WPI
replaces the existing 2011-12 base year series, the government has decided to
continue publishing the old series for the next five years to ensure a smooth
transition for policymakers, businesses, researchers and other stakeholders
before its eventual discontinuation.
Reflecting the
changing structure of the Indian economy, the revised WPI basket has been
substantially expanded from 697 items to 957 items. Emerging energy sources
such as solar power, wind energy and nuclear electricity have been incorporated
under the electricity category, while crude petroleum and natural gas have been
shifted from the Primary Articles group to the Fuel and Power category to
provide a more accurate representation of energy price dynamics.
The updated series
also introduces methodological refinements, including the use of Gross Value of
Output (GVO) for assigning weights, adoption of a short-term formulation method
for elementary index compilation and a targeted mean imputation approach for
addressing missing price data, enhancing the robustness and reliability of
inflation estimates.
The first set of data
released under the new framework showed wholesale inflation accelerating
sharply. Provisional estimates for May 2026 placed WPI inflation at 9.68 per
cent year-on-year, compared with 8.26 per cent in April. The all-commodity WPI
rose to 109.9 in May from 108.8 in the previous month. Fuel and Power emerged
as the biggest inflation driver with a steep 30.33 per cent increase, followed
by Manufactured Products at 7.48 per cent and Primary Articles at 4.99 per
cent.
According to the
government, mineral oils, crude petroleum and natural gas, chemicals and
chemical products, and basic metals were the principal contributors to
wholesale inflation during April and May. Food prices also witnessed an uptick,
with the WPI Food Index rising 4.49 per cent year-on-year in May, up from 3.11
per cent in April.
Complementing the
revised WPI, the newly introduced Output Producer Price Index (OPPI) recorded
an increase in the all-commodity index to 109.6 in May from 108.6 in April,
indicating continued pricing pressures across manufacturing, agriculture,
mining and quarrying sectors.
The government also
rolled out a Trial Input Producer Price Index (IPPI) for the manufacturing
sector on an experimental basis. The index stood at 104.9 in May 2026 and is expected
to help policymakers assess input cost trends while allowing authorities to
evaluate data quality and gather stakeholder feedback before broader
implementation.
Expanding inflation tracking beyond goods, the Office of the Economic Adviser has introduced Service Producer Price Indices for seven sectors in the first phase, including banking, securities transactions, insurance, pension fund management, railways, air passenger transport and telecommunications. These indices will be released quarterly and are expected to provide valuable insights into price trends within India’s rapidly growing services economy.
For the fourth quarter of FY 2025-26, the Securities Transaction Service Price Index rose to 91.7, while the Railway Service Price Index increased to 103.3, offering an early glimpse into sector-specific pricing movements under the new framework.
