On Monday, India’s government released quarterly producer price index (PPI) data for the services sector. This helps fill a gap in inflation measurement.
While the wholesale price index is only for goods and many services are included in the retail gauge’s basket, India lacked a tracker of service prices at the production level despite this sector’s dominance of the Indian economy.
With a PPI, statisticians will have a better way to deflate output numbers for calculations of real growth.
To begin with, this PPI covers seven big sub-sectors. It will be expanded in phases. Figures released for the April-June quarter show moderate price escalation, barring civil aviation services, which were found 32% dearer than a year earlier.
The others being tracked are securities transactions, banking, pension fund management, insurance, telecom and rail services, all with mid-single-digit or lower readings. Higher jet-fuel costs partly explain the airfare spike.
In several cases, PPI changes are mirrored by retail price trends. Still, this index will become all the more useful once it broadens its coverage. Once PPI data establishes a track record, it would count as a useful upgrade of Indian statistics.