131735279

esale inflation had accelerated to a 42-month high of 8.3% in April under the old series.India's wholesale food prices stood at 4.49% in May while fuel and power prices surged 30.33% in May.The food index was at 3.11% in April and fuel and power wholesale inflation was at 24.89%, according to the latest release.Inflation in crude petroleum and natural gas shot up 61.51%. On Monday, the government also launched a new producer price index (PPI) series and unveiled a wholesale price index (WPI) with an updated base year, in a significant overhaul of its inflation tracking framework. The base year for the WPI has been revised from 2011-12 to 2022-23 and expands the number of commodities covered to 957 from 697.India relies on the WPI as a key gauge of producer-level inflation. However, the introduction of the PPI aligns India more closely with global statistical standards and, over time, will help policymakers better adjust economic growth data for inflation. Efforts to replace the WPI with a PPI have been under discussion for more than two decades.Last week, India's retail inflation accelerated to 3.93% in May as food and fuel prices firmed amid the escalating conflict in West Asia. The RBI during its monetary policy meeting last week had raised its FY27 inflation forecast, signalling mounting price pressures from higher food costs and a recent pickup in consumer inflation amid the escalating conflict in West Asia. The central bank now expects consumer price inflation to average 5.1% in FY27, up from the 4.6% projection in its April policy review.What is new in India's WPI new seriesThe revised WPI series broadens coverage of India's changing energy mix by including renewable sources such as solar and wind power, as well as nuclear electricity. Crude oil and natural gas have also been moved from the primary articles category to the fuel and power group, creating a more comprehensive measure of energy prices.The government has updated the index's methodology, with weights now based on Gross Value of Output (GVO) rather than net traded value. Officials said the change better captures the economic importance of commodities from a producer's perspective.The overhaul is part of a broader effort to modernise India's statistical framework. In recent months, authorities have updated the base years for key indicators including GDP, consumer inflation and industrial production to better reflect current economic activity and consumption patterns.The new WPI series also adopts a chain-based short-term formulation method, replacing the long-term approach used previously and bringing the index closer to global statistical standards. To ensure continuity, the government has introduced a linking factor based on the geometric mean of FY25 indices, allowing comparisons between the old and new WPI series across commodities and major groups during the transition period.Transition from WPI to PPIUnlike the WPI, which tracks only goods, the new PPI will also cover services. The index will include measures of input costs, output prices and service-sector inflation, initially covering seven services: banking, securities transactions, insurance, pension fund management, railways, air passenger transport and telecommunications.The government plans to gradually shift from WPI to PPI over the next five years, although the timeline will depend on the performance of the new indices. Service-sector PPI data is expected to be released quarterly. Economists say the broader index will provide a clearer picture of industry-specific inflation, help businesses make pricing decisions and support more targeted economic policymaking.