Prices of Air Passenger Service Rose by 31.94% In Q1 of Current Financial Year

New Delhi:  The prices of air passenger services increased by 31.94 per cent year-on-year in the first quarter of FY2026-27, marking the sharpest rise among the seven services covered under the government’s new service producer price index (PPI) framework.

The air (passenger) service price index rose to 126.4 in Q1 FY27 from 106.9 in Q4 FY26, with the government reporting the year-on-year inflation rate for the first time.

According to provisional data released by the Office of the Economic Adviser on Monday, the Service PPI uses 2022-23 as its base year and is compiled quarterly. The latest release contains provisional estimates for Q1 FY27 along with final estimates for Q4 FY26.

The Service PPI tracks price movements for selected services at the producer or service-provider level. Unlike the consumer price index, which measures prices paid by households, the Service PPI captures changes in prices for services provided by businesses.

Seven Services

The government currently compiles the index for seven services.

This includes banking, securities transactions, insurance, management of pension funds, railways, air passenger services and telecom.

The seven services have not been assigned an overall weight because they do not cover the entire services sector.

However, weights have been assigned at the sub-service level within individual categories to calculate the respective Service PPI. As a result, the latest figures should not be interpreted as an economy-wide measure of services inflation.

Banking services recorded contrasting movements across the two indices released for the sector. The banking service price index stood at 100.9 in Q1 FY27, up from 100.5 in Q4 FY26, but declined 3.35 per cent year-on-year after falling 4.10% per cent in the previous quarter.

The separate banking service contribution index rose to 134.8 in Q1 FY27 from 131.5 in Q4 FY26, recording 6.90 per cent year-on-year growth compared with 3.30 per cent in Q4 FY26. The two indices measure different aspects of banking activity and should therefore not be treated as a single measure of banking price inflation.

The management of pension funds service price index increased 5.20 per cent year-on-year, reversing a 0.76 per cent decline in Q4 FY26. Insurance service prices rose 0.98 per cent, while telecom service prices increased 0.72 per cent.

The railway service price index rose 1.27 per cent year-on-year, with the passenger service index increasing 3.50 per cent and the freight index rising 0.10 per cent. The securities transaction service price index declined 1.32 per cent year-on-year, compared with a 0.55 per cent increase in Q4 FY26.

The Service PPI forms part of the government’s broader move towards a producer-price framework. Alongside the revised wholesale price index (WPI) with 2022-23 as the base year, the government has introduced an output producer price index, a trial input producer price index and Service PPI.

The Centre said the move towards a producer-price framework aligns with international practices and the recommendations of the International Monetary Fund (IMF). The WPI will continue to be released for five years following the launch of the new series, giving users time to transition to the new framework.

The Service PPI remains at an early stage, with coverage currently limited to seven services. Service PPIs for Q2 FY27 are scheduled to be released on 25 November. (BVI)