Wholesale Price Index- WPI

Wholesale Price Index- WPI

What is the Wholesale Price Index?

  • It measures the changes in the prices of goods sold and traded in bulk by wholesale businesses to other businesses.
  • Published by the Office of Economic Adviser, Ministry of Commerce and Industry.
  • It is the most widely used inflation indicator in India. A major criticism of this index is that the general public does not buy products at wholesale prices.
  • The base year of the All-India Wholesale Price Index (WPI) has been revised from 2004-05 to 2011-12 in 2017.

Weightage of Wholesale Price Index (WPI):

All Commodities/Major GroupsWeightage (%)Articles
All Commodities100
I. Primary Articles22.6LPG, Petrol, High-Speed Diesel
II. Fuel & Power13.2The Food Index consists of ‘Food Articles’ from the Primary Articles group and ‘Food Products’ from Manufactured Products group.
III. Manufactured Products64.2Mf/o Food Products: Vegetable And Animal Oils and Fats.

Mf/o of Beverages. Mf/o of Tobacco Products, Wearing Apparel, Pharmaceuticals, Medicinal Chemical and Botanical Products, and other Non-Metallic Mineral Products etc.
IV. Food Index24.4The Food Index consists of ‘Food Articles’ from the Primary Articles group and ‘Food Products’ from the Manufactured Products group.

Factors Influencing WPI Inflation:

  • High Base Effect: Experts suggest that WPI inflation is expected to remain moderate due to the high base effect.
  • Easing Global Commodity Prices: The decline in global commodity prices is anticipated to help keep inflation of manufactured products at a lower level.
  • Food Inflation and Monsoon Prospects: The prices of wheat, affected by market conditions, need to be monitored. Additionally, the monsoon’s impact on the inflation of Kharif crops is a concern.

What is the Difference Between WPI and CPI?

  • WPI tracks inflation at the producer level and Consumer Price Index (CPI) captures changes in price levels at the consumer level.
  • Both baskets measure inflationary trends (the movement of price signals) within the broader economy, the two indices differ in which weights are assigned to food, fuel and manufactured items.
  • WPI does not capture changes in the prices of services, which CPI does. In WPI, more weightage is given to manufactured goods, while in CPI, more weightage is given to food items.
  • The base year of WPI is 2011-2012 while CPI is 2012