Service Producer Prices Show Diverging Trends Across Key Sectors In Q1FY27

Provisional government data released on Monday showed that prices received by service producers increased in five of the seven segments covered by the new Service Producer Price Index (PPI), while two recorded year-on-year declines.

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Air Passenger Services Record Sharpest Increase

Air passenger service prices rose 31.94% year-on-year in Q1 FY27, marking the largest increase among the services tracked by the index. Management of pension funds recorded a 5.20% rise during the quarter.

Railway services followed with a 1.27% increase, while insurance prices rose 0.98%. Telecom service prices were up 0.72% during the same period, according to data from the Ministry of Commerce and Industry.

Within railway services, passenger-related prices increased 3.50% year-on-year. Prices for railway freight services, meanwhile, rose 0.10%.

Banking And Securities Services See Decline

Prices for banking services fell 3.35% in Q1 FY27, while securities transaction services declined 1.32%. The movement in banking prices came despite a 6.90% increase in the separately reported Banking Service Contribution Index.

The data therefore showed a varied movement across financial services, with producer prices falling in both banking and securities transaction services during the quarter.

Service PPI Tracks Producer-Side Price Movement

The Service Producer Price Index uses 2022-23 as its base year and currently covers seven service categories: securities transactions, banking, pension fund management, insurance, telecom, railways and air passenger services.

The government has not assigned weights to these seven services in an overall index because they do not represent the entire services sector. However, weights at the sub-service level have been used to calculate the PPI for individual service categories.

The Service PPI was first released in June 2026 as part of the revised price-statistics framework introduced alongside the Wholesale Price Index (WPI) with 2022-23 as its new base year.

The index is designed to track prices of services received by producers of services, and to serve as a producer-side indicator for some parts of the services economy not well covered by existing wholesale price measures.

The government has also indicated that the data could support economic analysis and, eventually, be used as a deflator in national accounts.

The next update will cover the second quarter of FY27. The government has scheduled its release for November 25, extending the new service-price series into the second half of the financial year.