The government will release a producers’ price index (PPI) for ten services on trial basis in June 2018. The move will help track inflation in services including telecom, railways, ports, postal, insurance, banking, transportation and air travel. PPI measures the average movements of prices received by domestic producers for goods and services sold on the domestic or/and on the export markets.
Presently, wholesale price index (WPI) and consumer price index (CPI) are used for tracking price movement. The WPI measures price movement of goods in wholesale markets, while the CPI tracks inflation at retail level and also includes certain services. While the incidence of taxes are accounted for in WPI and CPI, the PPI would reflect the cost at producers point sans taxes.
In case of railways, price movement would be tracked for freight tariff and passenger fares. On the other hand, the index of banking would include direct services and fees. The PPI for services assumes importance the sector contributes about 60 percent in India’s gross domestic product (GDP) growth.