New PPI series replaces wholesale index as per IMF guidance, says Finance Ministry

The Ministry of Finance, in a letter to the expenditure divisions of all ministries, has urged the adoption of the Producer Price Index (PPI) for future contractual price‑escalation clauses, replacing the long‑used Wholesale Price Index (WPI).

The shift comes after the Commerce Ministry started publishing monthly PPI data for both goods and services in June, aiming to reflect price changes at the producer’s end more faithfully. This aligns with global best practices and recommendations from the International Monetary Fund (IMF).

The finance ministry highlighted that having both output and input PPI series will allow ministries to track changes in the cost of raw inputs and finished goods separately, providing a clearer picture of inflation transmission across the value chain.

The updated WPI, now using 2022‑23 as the base year, was released on June 15, superseding the older 2011‑12 series. In parallel, a new output PPI series, a trial input PPI, and a service‑PPI covering seven essential services have been launched.

Both indexes will be published together for the next five years, giving agencies a five‑year window to transition to PPI before the wholesale index is withdrawn entirely.