A wholesome index

The Government must seriously consider developing a Producer Price Index (PPI), as recently suggested by the Reserve Bank of India Governor, Dr D. Subbarao. Just as the Consumer Price Index (CPI) measures inflation from a purchaser’s perspective, the PPI would look at changes over time in prices received by producers. Right now, we only have the wholesale price index (WPI), which is supposed to capture inflation from a producer’s standpoint, but does not really do so.

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