Producer Price Index: New Model
The DPIIT is finalizing a new model of the Producer Price Index (PPI) to better capture input prices in the economy.
- Producer Price Index measures the average change in prices received by producers for goods and services sold in the domestic market or exported.
- It includes two types: Output PPI for goods and services leaving production sites, and Input PPI for goods and services entering production processes.
- The new model of PPI aims to replace WPI due to biases in double counting of products, exclusion of exports/imports, and overlooking the service sector (55% of GDP).
- It has been shared with the IMF, and consultations are underway to transition from WPI to PPI, aligning with most G20 economies.
- The government is also considering changing the base year of the Wholesale Price Index (WPI) from 2011-12, with discussions ongoing with MoSPI and the National Statistical Commission.
