The Department of Promotion of Industry and Internal Trade (DPIIT) has finalized an improved model for calculating the Producer Price Index (PPI) that aims to give a clearer picture of rising material and production costs according to top officials.
DPIIT Secretary Rajesh Kumar Singh revealed that the new PPI model has been shared with the International Monetary Fund after extensive consultations aimed at better capturing price movements across different industry sectors. The revamped index is expected to offer insights into inflation at the earliest stages of the supply chain.
While the current Wholesale Price Index (WPI) continues to be the primary gauge of wholesale inflation, authorities recognize limitations in fully reflecting input cost burdens on manufacturers. Mr. Singh noted discussions are ongoing regarding a possible base year revision for the WPI as well as a longer-term shift towards the PPI which has replaced wholesale indexes in major global economies.
Statistics authorities will evaluate the new PPI methodology before it can be implemented. But officials stressed the importance of modernizing economic indicators to maintain transparency around production expenditures contending with rising commodity prices and supply chain headwinds. The improved data transparency is aimed at facilitating well-informed policy decisions impacting industrial competitiveness.
