Wholesale Price Index (WPI):
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Wholesale Price Index (WPI) is based on the price prevailing in the wholesale markets or the price at which bulk transactions are made.
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It includes three components:
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Manufactured products = 64.2%
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Primary articles = 22.6%
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Fuel and power = 13.1%
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Base year is 2011-12.
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The Wholesale Price Index is released by the Office of Economic Advisor (OEA), Department of Industrial Policy and Promotion, Ministry of Commerce and Industry.
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It is the most widely used inflation indicator in India.
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Major criticism for this index is that the general public does not buy products at wholesale price.
What is the difference between CPI and WPI?
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WPI tracks inflation at the producer level and CPI captures changes in prices levels at the consumer level.
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WPI does not capture changes in the prices of services, which CPI does.
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In WPI, more weightage is given to manufactured goods, while in CPI, more weightage is given to food items.
Previous Year Questions:
Q 1.) With reference to India, consider the following statements: (2010)
1. The Wholesale Price Index (WPI) in India is available on a monthly basis only.
2. As compared to Consumer Price Index for Industrial Workers (CPI(IW)), the WPI gives less weight to food articles.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Ans: (b)
Q 2.) Consider the following statements: (2020)
1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services, which CPI does.
3. The Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 only
(c) 3 only
(d) 1, 2 and 3
Ans: (a)