The Wholesale Price Index (WPI) is an important index necessary for calculating inflation in a country. In this article, you can understand what is this index and how it is important for the IAS Exam – Indian Economy syllabus which comes under General Studies Paper-3 section in the UPSC Syllabus.
The rate of inflation based on WPI Food Index increased from 5.28% in March, 2021 to 7.58% in April, 2021. Final Index for the month of February, 2021-For the month of February, 2021 the final Wholesale Price Index and inflation rate for ‘All Commodities’ (Base: 2011-12=100) stood at 128.1 and 4.83% respectively.
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What is the Wholesale Price Index (WPI)?
The Wholesale Price Index represents the price of a basket of wholesale goods. WPI focuses on the price of goods that are traded between corporations. It does not concentrate on goods purchased by the consumers.
- The main objective of WPI is monitoring price drifts that reflect demand and supply in manufacturing, construction and industry.
- WPI helps in assessing macroeconomic as well as microeconomic conditions of an economy.
Wholesale Price Index (WPI) India
Generally, WPI and CPI (Consumer Price Index) are used to calculate the inflation rates. In India, Inflation rates are based on WPI which is released by the Ministry of Commerce and Industry.
The CPI is a measure that assesses the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, purchased by households.
India experienced its highest inflation rate of 34.68 per cent in September of 1974. And the lowest rate touched -11.31 per cent in May 1976.
The Difference between WPI and CPI
|Definition||Amounts to the average change in prices of commodities at the wholesale level.||Indicates the average change in the prices of commodities at the retail level.|
|Publishing office||Office of Economic Advisor (Ministry of Commerce & Industry)||Central Statistics Office (Ministry of Statistics and Programme Implementation) & Labour Bureau|
|Commodities||Goods only||Goods and Services both|
|Inflation Measurement||First stage of a transaction||Final stage of a transaction|
|Prices paid by||Manufacturers and wholesalers||Consumers|
|Types of Commodities covered||Manufacturing inputs and intermediate goods like minerals, machinery basic metals, etc.||Education, communication, transportation, recreation, apparel, foods and beverages, housing and medical care|
Note: Base Year to be revised.
Wholesale Price Index (WPI):- Download PDF Here
Aspirants preparing for the upcoming UPSC exam can go through the following links to prepare for economics better-
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