BT Explainer: New inflation framework: What are output PPI and input PPI?

India is set to take a major step in modernizing how it measures inflation, with the Centre announcing the launch of a new series of wholesale and producer price indices from June 15, 2026. The move is part of a broader plan to gradually transition from the Wholesale Price Index (WPI) to a Producer Price Index (PPI)-based framework that aligns with global best practices.

The Department for Promotion of Industry and Internal Trade (DPIIT) said the Office of Economic Adviser will release the revised Wholesale Price Index (WPI) series with a new base year of 2022-23, replacing the current 2011-12 series. Alongside it, the government will introduce three new producer price measures: Output Producer Price Index (OPPI), Input Producer Price Index (IPPI), and Service Producer Price Index (Service PPI).

What is changing?

The government plans to continue publishing WPI alongside the new PPIs for five years before eventually discontinuing WPI around 2031. Officials say this transition period will give businesses, policymakers, and users of WPI-linked contracts sufficient time to shift to the new framework.

While OPPI and IPPI will be released every month, the Service PPI will be published quarterly. Initially, the Service PPI will cover seven sectors: banking, securities transactions, insurance, pension fund management, railways, air passenger transport, and telecommunications.

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What is Output PPI?

Output Producer Price Index (OPPI) measures prices received by producers for the goods and services they sell.

The index is based on what economists call the Basic Price, which excludes taxes as well as trade and transportation margins. In simple terms, OPPI reflects the price producers actually receive at the factory gate or point of production.

This makes OPPI an important indicator of inflation from the producer's perspective and helps track how selling prices change over time.

What is Input PPI?

Input Producer Price Index (IPPI) measures the prices producers pay when purchasing raw materials, components, fuel, and other inputs required for production.

Unlike OPPI, IPPI is based on the Purchaser's Price, which includes trade and transportation margins. It therefore captures the cost pressures faced by businesses before products reach the market.

Economists view IPPI as a useful gauge of cost inflation because it shows how rising input prices may eventually affect final output prices.

PPI vs WPI

India's existing WPI is already similar to Output PPI because both measure prices received by producers. However, the two differ in how they are weighted.

WPI uses Gross Value of Output estimates from National Accounts, while Output PPI relies on supply tables within the National Accounts framework.

Input PPI differs more significantly because it measures purchaser prices rather than producer prices, providing a direct view of production costs.

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Why is India moving to PPI?

Officials say the PPI framework is more consistent with national accounting standards and international practices followed by advanced economies.

One major advantage is that having both Output PPI and Input PPI allows policymakers to understand how increases in production costs are passed on to consumers through output prices. The framework also reduces the risk of double counting inflation and broadens coverage beyond goods to include services.

With services accounting for a growing share of India's economy, the introduction of Service PPI marks an important step toward a more comprehensive measure of producer inflation and a modernized inflation-monitoring system.

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