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Producer Price Index : New Model

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.