Wholesale inflation at 9.68% in May under new series as fuel, food prices rise

Domestic wholesale inflation came in at 9.68 per cent in May, rising from 8.26 per cent in the previous month, as the country switched to a new base year, official data showed on Monday. The latest data is based on 2022-23 as the base year instead of the 2011-12 earlier. Among major groups, inflation in primary articles, fuel and power, and manufactured products was recorded at 4.99 per cent, 30.33 per cent and 7.48 per cent in May 2026, instead of 3.78 per cent, 24.89 per cent, and 6.68 per cent in April, respectively. Gauged by the Wholesale Price Index, wholesale inflation -- also known as headline inflation -- is the rate of increase in the bulk prices of a group of commodities, including food, vegetables, electricity, and auto and cooking fuel.

Wholesale inflation in food -- gauged by the WPI Food Index -- was recorded at 4.49 per cent in May versus 3.11 per cent in the previous month. The sub-index has a weightage of almost 25 per cent in the overall Wholesale Price Index.

Official macroeconomic readings are undergoing a base-year revision. The new WPI series expands the commodity basket, adds renewable and nuclear energy data, reorganises the energy basket, improves weighting and statistical methods, and introduces producer-price measures for goods and services. The government plans to make a gradual five-year transition from WPI to Producer Price Index (PPI), with both indices running parallel during the transition period.

The latest WPI reading comes days after separate data showed that consumer inflation in the country stood at 3.93 per cent in May versus 3.48 per cent in April. That overall reading was within the Reserve Bank of India's medium-term target of 4 per cent. Retail food inflation was recorded at 4.78 per cent in May.

The Reserve Bank of India (RBI) tracks consumer inflation data primarily to formulate or adjust its monetary policy.

Key changes in new WPI series (2022-23) vs old series (2011-12)

Here are key changes in the new data set:

• Basket Expansion: The number of items covered under the new series is 957, marking an addition of 160 items over the earlier one. Authorities make these changes from time to time to capture the current economic conditions.
• Major Additions: The new data set spans areas such as renewable and nuclear energy, with the induction of solar power and wind power under the electricity group and nuclear electricity under the overall basket.
• Reclassification: In a significant change, crude and natural gas have been transferred from 'primary articles' to the 'fuel and power' category.
• Weighting Method: The new series uses gross value of output (GVO) to determine weights, instead of the earlier net traded value system. The new method focuses more on the country's actual production economy rather than trade flows, whereas the earlier system gave importance to both domestic production and trade.
• Improved Calculation: Elementary sub-indices within the WPI are now compiled using the short-term formulation method. Earlier, the long-term formulation method was used.
• Missing Data Estimations: In the new series, any missing price observations are estimated using targeted mean imputation. Instead of assuming the price stayed unchanged, statisticians now estimate the missing price using the average price movement of similar products or similar reporting units that did provide data.
• Additional Indices: In a first, the government has launched additional indices along with the WPI. These are:
  • Output Producer Price Index (OPPI)
  • Trial Input Producer Price Index (IPPI) for manufacturing
  • Service Producer Price Index (Service PPI)

• All Commodities: 1.53
• Primary Articles: 1.71
• Fuel and Power: 1.65
• Manufactured Products: 1.44