The Producer Price Index or PPI is an index used to calculate the movement of price from the seller’s point of view. It is one of the important price indices like the Consumer Price Index (CPI) and the Wholesale Price Index (WPI). PPI will come under Indian Economy subject of IAS Exam.
|For more articles about the Indian economy or about Economics in general, be sure the visit the UPSC Notes on Indian Economy page now:
The following links will help candidates in their preparation of the Economy segment of the UPSC Exams:
What is the Producer Price Index (PPI)?
The Producer Price Index or PPI is an index that measures the average price change of goods and services. It can be calculated either when the goods leave the place of production or as they enter the production process.
- In the case where the goods leave the production place, it is known as Output PPI.
- Similarly, Input PPI is when goods enter the production process.
The PPI measures price movements from the seller’s point of view. Conversely, the consumer price index (CPI), measures cost changes from the viewpoint of the consumer. In other words, this index tracks changes to the cost of production.
Producer Price Index (PPI) vs Wholesale Price Index (WPI)
|Producer Price Index (PPI)||Wholesale Price Index (WPI)|
|The Producer Price Index or PPI is an index that measures the average price change received by the producer excluding the indirect taxes.||The Wholesale Price Index represents the price change of a basket of goods and includes some taxes levied. The distribution costs are also considered in WPI.|
|It tracks price change in both the goods and the services sector, giving a clear picture of the inflation in the country.||The services sector which contributes to 60% of the GDP is not included in WPI.|
Producer Price Index (PPI) vs Consumer Price Index (CPI)
|Producer Price Index (PPI)||Consumer Price Index (CPI)|
|PPI is an estimate of the change in average prices that the producer receives which are not always what the consumer pays for it.||Consumer Price Index (CPI) measures the change in average prices that the consumer pays to the retailer.|
Producer Price Index (PPI):- Download PDF Here
Indian Economy is a major subject of the General Studies Paper-3 section in the UPSC Syllabus. Aspirants can expect questions from this topic for UPSC prelims, mains or even in the Economics optional paper.
For more UPSC-related preparation materials visit the links given in the table below: