SYLLABUS

GS-3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Context: India's wholesale price inflation rose to 9.68% in May 2026 under the newly revised Wholesale Price Index (WPI) series with base year 2022-23, mainly driven by sharp increases in energy prices.

More on the News

• Alongside the revised WPI, the government introduced the Output Producer Price Index (OPPI), Trial Input Producer Price Index (IPPI), and Service Producer Price Indices (Service PPIs) for selected sectors.

• The move aims to align India's producer-price measurement framework with international best practices and IMF recommendations. 

• The government has announced that WPI will continue alongside PPIs for five years before being phased out.

Key Highlights of the Findings

• WPI inflation increased to 9.68% in May 2026, up from 8.26% in April 2026.

• Fuel and Power inflation surged to 30.33%, emerging as the biggest contributor to wholesale inflation.

• Inflation in Crude Petroleum & Natural Gas rose to 61.51%, while Mineral Oils recorded 49.82% inflation.

• Manufactured Products inflation accelerated to 7.48% from 6.68% in April.

• Primary Articles inflation increased to 4.99% from 3.78%.

• The WPI Food Index rose by 4.49%, compared with 3.11% in April.

• Major drivers of inflation were Mineral Oils, Crude Petroleum & Natural Gas, Chemicals & Chemical Products, and Basic Metals.

About the Wholesale Price Index (WPI)

• WPI measures the average change in prices of goods traded at the wholesale/producer level before they reach consumers. 

• It is compiled and released by the Office of the Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry. 

• The revised WPI series uses 2022-23 as the base year, replacing the 2011-12 series. 

• It is released on a monthly basis, generally on the 14th of the following month (or next working day). 

• The new basket covers 957 commodities, up from 697 commodities in the previous series. 

• The index is divided into three major groups: 

• Primary Articles (22.76%) 
• Fuel and Power (14.11%) 
• Manufactured Products (63.13%) 

• Manufactured Products carry the highest weight in the index basket. 

• Solar Power, Wind Power, and Nuclear Electricity have been included in the Electricity group. 

• Crude Petroleum and Natural Gas have been shifted from the Primary Articles group to the Fuel and Power group for better tracking of energy prices. 

• The new series uses Gross Value of Output (GVO) for assigning weights, replacing the earlier Net Traded Value approach. 

• The elementary indices are now compiled using the short-term formulation method, replacing the long-term formulation method. 

• Missing price observations are estimated through Targeted Mean Imputation, replacing the earlier Carry Forward Method. 

• A WPI Food Index is also compiled by combining: 

• Food Articles under Primary Articles, and 
• Manufacture of Food Products under Manufactured Products. 

• WPI covers only goods and does not include services.

About the Output Producer Price Index (OPPI)

• OPPI measures changes in prices received by producers for goods sold at the factory gate or first point of sale.

• It is compiled on a monthly basis with 2022-23 as the base year.

• Weights are derived from the Supply Table of the National Accounts Supply and Use Table (SUT).

• The All Commodities OPPI stood at 109.6 in May 2026, compared with 108.6 in April 2026.

• Major sectors covered include:

• Agriculture, Forestry and Fishing
• Mining and Quarrying
• Manufactured Products
• Electricity

• OPPI provides a more direct measure of producer-level inflation than WPI.

• OPPI is compiled using Basic Prices (factory-gate prices).

About the Trial Input Producer Price Index (IPPI)

• IPPI measures changes in prices paid by industries for inputs used in the production process.

• It is currently being published on a trial/experimental basis for the manufacturing sector.

• Weights are derived from the Use Table of the National Accounts Supply and Use Table (SUT).

• Unlike WPI and OPPI, IPPI is compiled using Purchaser's Prices, reflecting actual input costs faced by industries.

• The Manufacturing Sector IPPI stood at 104.9 in May 2026.

About the Service Producer Price Index (Service PPI)

• Service PPI measures changes in prices received by service providers.

• It is compiled on a quarterly basis and released with a lag of 55 days after the end of the reference quarter.

• Service PPI is compiled using Basic Prices.

• In the first phase, Service PPIs have been introduced for seven sectors:

• o Banking
• o Securities Transactions
• o Insurance
• o Management of Pension Funds
• o Railways
• o Air Passenger Transport
• o Telecommunications