The Government of India is going to make a big change related to business and economy this month on 15th June 2026 at 12 noon. Now a new meter is being introduced in the country to measure inflation i.e. the rise and fall in prices, whose name is ‘Producer Price Index’ (PPI). In simple words, this new meter will measure how much the prices are increasing or decreasing when the goods are manufactured in the factories and come out.
Its purpose is to bring India’s data at par with the developed countries of the world and the rules of the International Monetary Fund (IMF). In the next 5 years, the old wholesale inflation system i.e. ‘Wholesale Price Index’ (WPI) will be completely stopped and only this new PPI will be used in its place.
The biggest reason for bringing this new system is that the service sector has the largest share in India’s income i.e. GDP, but the old system was not able to track the inflation of services. Apart from this, when raw materials become expensive for companies, they will also be able to find out how quickly and to what extent they transfer the burden to the general public. This new meter will also act as a warning meter to predict retail inflation.
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The difference between the new and old systems
The biggest difference between the earlier and now systems is where inflation is being measured and at what price. In the old WPI system, inflation was measured according to the wholesale market. When goods came to the wholesale market, tax, profit of traders and freight for sending the goods were also added to it. Due to this, it was not possible to know what price the factory owner himself was getting for selling his goods. Apart from this, in the old WPI system, only the prices of goods were seen and it did not include the service sector.
Now with the introduction of the new PPI system, inflation in goods as well as service sectors like banks, phones, air travel will also be measured. The new rule will mainly look at the ‘Basic Price’. This means that taxes, traders’ profits and transportation costs will be completely removed while measuring the price. This will reveal only the real price of the goods in the factory and its inflation. On the other hand, ‘Input PPI’ will be used to measure the inflation of the raw materials that factories have to buy to make their goods. There will be tax and rent involved in this because the factories buy the raw material from the market only after paying all this.
When and how will the new rule start?
This new system will start on June 15, 2026 at 12 noon. Inflation figures for the month of May will be released. Along with this, old records from April 2023 till now will also be released. Many business contracts and agreements in India rely on the old WPI data, so the government will continue to use both WPI and PPI together for the next 5 years. This will give full time to traders and companies to understand and adapt to the new system and after this WPI will be closed forever.
Data will be available in three different parts
The new PPI system will not come in the form of a single figure but in three different pieces so that it can measure inflation. The first part in this is ‘Output PPI’ which will be released every month and it will see what price a factory owner or manufacturer is getting for selling his goods, like what rate a refinery gets for selling petrol.
The second part of this is ‘Input PPI’ which has been started only as a trial for the manufacturing sector. This will also come every month and will measure what price the producer has to pay for purchasing the raw material, such as at what rate the refinery purchased the crude oil. Its third part is ‘Service PPI’ which will measure the inflation of services for the first time in the country and its data will be released every three months.
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What seven things will be included?
In the first step of this new rule, inflation of only seven big sectors will be measured. These seven sectors include the functioning of banks, functioning of the stock market, insurance, pension fund management, passenger travel in trains and airplanes and telecom services like phone-internet. Later, as the government starts getting data from other companies or businesses, the remaining services will also be added to this list.
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