The Wholesale Price Index (WPI) is the
price
A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the c ...
of
a representative basket of
wholesale
Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In ...
goods. Some countries (like the Philippines) use WPI changes as a central measure of
inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
. But now India has adopted new CPI to measure inflation. However,
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
now report a
producer price index
A producer price index (PPI) is a price index that measures the average changes in prices received by domestic producers for their output.
Its importance is being undermined by the steady decline in manufactured goods as a share of spending.
...
instead.
It also influences stock and fixed price markets. The WPI is published by the Economic Adviser in the Ministry of Commerce and Industry. The Wholesale Price Index focuses on the price of goods traded between corporations, rather than the goods bought by consumers, which is measured by the
Consumer Price Index
A consumer price index (CPI) is a price index, the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time.
Overview
A CPI is a statistica ...
. The purpose of the WPI is to monitor price movements that reflect supply and demand in industry, manufacturing and construction. This helps in analyzing both
macroeconomic
Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole.
For example, using interest rates, taxes, and ...
and microeconomic conditions.
Calculation
The wholesale price index (WPI) is based on the wholesale price of a few relevant commodities of over 240 commodities available. The commodities chosen for the calculation are based on their importance in the region and the point of time the WPI is employed. For example, in India about 435 items were used for calculating the WPI in base year 1993-94 while the advanced base year 2011-12 uses 697 items. Currently the base year has been revised from 2004-05 to 2011-12 by the Office of Economic Advisor(OEA), Department for promotion of industry and internal trade Ministry of Commerce and Industry to align it with the base year of other macro economic indicators
like the gross domestic product (GDP)and Index of Industrial Production (IIP).
Under primary article group of the new WPI there are 117 items against earlier 98, while fuel and power category remains static at 16. In the new series, there are 564 items of manufactured products compared to 318 items earlier.
The indicator tracks the price movement of each commodity individually. Based on this individual movement, the WPI is determined through the averaging principle. The following methods are used to compute the WPI:
The Laspeyres Formula is the weighted arithmetic mean based on the fixed value-based weights for the base period.
The Ten-Day Price Index is a procedure under which, “sample prices” with high intra-month fluctuations are selected and surveyed every ten days by phone. Utilizing the data retrieved by this procedure, and with the assumption that other non-surveyed “sample prices” remain unchanged, a “ten-day price index” is compiled and released.
Monthly price indexes are compiled by calculating the simple arithmetic mean of three ten-day “sample prices” in the month.
In May 2021, the Wholesale Price Index (WPI) soared to 12.94 per cent, the highest in the past decade.
See also
*
Consumer price index
A consumer price index (CPI) is a price index, the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time.
Overview
A CPI is a statistica ...
*
Inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
*
Monetary Union Index of Consumer Prices The Monetary Union Index of Consumer Prices (MUICP) is a weighted average of European Monetary Union countries' HICP (Harmonised Index of Consumer Prices). It is widely used a measure of inflation throughout the Eurozone - the countries with the eu ...
*
Price index
*
Producer price index
A producer price index (PPI) is a price index that measures the average changes in prices received by domestic producers for their output.
Its importance is being undermined by the steady decline in manufactured goods as a share of spending.
...
References
Price indices
Price index
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