If air travel has felt heavier on the wallet lately, the government's books agree. New data released on Monday shows air passenger fares climbed nearly 32 per cent over the past year - by far the sharpest increase among the seven service sectors now being tracked under India's new pricing yardstick.
A new way of measuring what India pays
The figures come from the Service Producer Price Index (PPI), a fledgling data series the Commerce and Industry Ministry has been building out since June. Unlike the wholesale price index most Indians are used to hearing about, the Service PPI looks at prices from the seller's side, what banks, airlines, insurers and telecom firms actually earn for the services they provide, rather than what households pay at the till.
For the June quarter of FY27, the ministry tracked seven sectors: banking, securities transactions, insurance, pension fund management, railways, air passenger travel and telecom, all benchmarked against 2022-23 prices. Final figures for the preceding March quarter were also published alongside the fresh numbers.
The sky-high outlier
Air travel stood apart from the rest of the pack. The Air (Passenger) Service Price Index rose 31.94 per cent year-on-year in the June quarter, a figure with no quarter-on-quarter comparison yet, since the sector's price baseline only kicks in from FY26.
Rail fares told a calmer story. Passenger railway services saw prices rise just 3.50 per cent annually, holding steady at exactly the same pace recorded in the March quarter.
Banking's mixed signals
Banking threw up one of the more curious contrasts in the data. The sector's services contribution index recorded 6.90 per cent inflation in the June quarter, more than double the 3.30 per cent seen three months earlier. Yet the Banking Service Price Index itself was still in deflation, down 3.35 per cent, even as that marked some improvement on the 4.10 per cent fall recorded in March.
Securities transactions followed a similar downward path, slipping 1.32 per cent in the June quarter after having actually shown mild inflation of 0.55 per cent the quarter before.
Pensions swing, insurance and telecom hold steady
Nowhere was the turnaround sharper than in pension funds, where the index flipped from a 0.76 per cent deflation in March to 5.20 per cent inflation by June. Insurance costs ticked up modestly to 0.98 per cent inflation, from 0.68 per cent previously, while telecom prices softened slightly to 0.72 per cent, down from 0.99 per cent in the prior quarter.
The ministry has signalled that more sectors will be folded into the Service PPI basket as the series matures.
Why the government is building a new index altogether
This exercise is part of a longer-term shift. India's move to a producer-focused pricing index follows recommendations from a working group led by former NITI Aayog member Ramesh Chand, set up on December 30, 2024 to overhaul how the country measures wholesale prices. The group's brief was twofold: update the WPI's outdated 2011-12 base year to 2022-23, and lay the groundwork for an entirely new PPI framework built on that same base year.
Chand's report, submitted in April, made the case that the PPI, spanning both an Output PPI for goods and this new Services PPI, gives a truer read of price movements from a producer's standpoint than the WPI ever could, and is better suited to feeding into GDP calculations and estimates of real value addition. The government now plans to phase out the WPI altogether over the next five years, with the PPI taking its place as India's primary yardstick for producer-level inflation.
