New Delhi, June 2: The Indian government has announced significant changes to improve inflation tracking. On Tuesday, it increased the number of items in the Wholesale Price Index (WPI) basket. Additionally, the government revealed plans to launch the Producer Price Index (PPI).
These measures aim to enhance the accuracy of inflation measurement and align it with global standards.
The government has updated the base year for the WPI to 2022-23, effective from June 15, replacing the previous base year of 2011-12.
The number of items in the WPI basket has risen from 697 to 957. New additions include solar and wind energy sources under the electricity group, along with nuclear power.
In its statement, the government indicated that crude petroleum and natural gas have been reclassified from ‘primary commodities’ to the ‘fuel and electricity’ segment. This restructuring is expected to improve coherence, as this group already includes key fuels like coal, electricity, and petroleum products.
The statement further noted enhancements in the new WPI series, including improved weighting methodologies and better calculation techniques to address missing price data.
Moreover, the government announced the introduction of the PPI alongside the WPI for the first time. The PPI will eventually replace the WPI.
The PPI will cover output, input, and key service sectors. The service PPI will include banking, insurance, railways, telecom, and air travel.
According to the government, both the WPI and PPI will be released on a monthly basis, while the service PPI will be published quarterly. Both indices will be issued together for the next five years.
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