Mining, Manufacturing Prices Jumped April-June, Shows New PPI Series

Annual linflation rate based on the Output Producer Price Index rose 9.1% for all commodities in April-June, up from 0.2% year earlier. Producer prices inflation for mining and quarrying rose to 18.8% from -2.0% a year ago, while manufactured products inflation increased to 10.7% from 0.9%. In comparison producer price inflation for agriculture, forestry and fishing was 4.9%, compared with -1.3% a year earlier, while inflation in electricity eased to -1.7% from 0.7% a year earlier.

The quarter coincided with a sharp rise in global crude oil prices amid the conflict in West Asia, lifting prices for crude oil, petroleum products and several industrial commodities. The increase in commodity prices was reflected across mining and manufacturing, particularly in petroleum products, chemicals, metals and food processing.

While the quarterly Output PPI show producers received higher prices for their goods than a year earlier, the monthly Trial Input Producer Price Index suggests manufacturers continued to face rising raw material costs through the quarter.

The manufacturing Input PPI rose every month since its introduction, increasing to 107.1 in June from 100.9 in March. The biggest increases were recorded in coke and refined petroleum products, textiles, chemicals, electrical equipment and food products, indicating higher energy and commodity costs were feeding through production chains.

The monthly manufacturing Output PPI, however, eased marginally to 109.2 in June from 109.5 in May even as the Input PPI climbed from 104.9 to 107.1, suggesting manufacturers were unable to fully pass higher input costs on to customers during the month.

The Office of the Economic Adviser introduced the Output PPI and Trial Input PPI in May alongside the new Wholesale Price Index with 2022-2023 as the base year. The government plans to publish the WPI and PPIs in parallel for five years before discontinuing the WPI in 2031, aligning India's inflation statistics with international practice. Unlike the WPI, which measures wholesale transaction prices, the PPI framework separately tracks prices received by producers and prices paid for inputs, providing a clearer measure of cost pass-through and pricing power. 

All Commodities                                      109.4                                  100.3

Agriculture, forestry & fishing                 112.5                                  107.2

Mining & quarrying                                 123.0                                  103.5

Manufactured products                            109.0                                    98.5

Electricity                                                  91.0                                     92.6

March                100.9

April                  104.2

May                   104.9

June                   107.1

Biggest increases in manufacturing input prices (June)

Coke & refined petroleum products   105.8                   113.5

Electrical equipment                          115.8                    117.7

Food products                                    110.5                    112.2

Chemicals & chemical products        111.8                    112.5

Textiles                                              103.1                    107.8