WPI is the index that is used to measure the change in the average price level of goods traded in wholesale market.
WPI in India is published by the Office of Economic Adviser, Ministry of Commerce and Industry. An, important point to take note of is the wholesale price index (WPI) does not includes the cost of services.
Further, as WPI accounts for changes in general price level of goods at wholesale level, it fails to communicate actual burden borne by the end consumer.
Characteristics of Wholesale Price Index
- The various commodities taken into consideration for computing the WPI can be categorized into primary article, fuel and power, and manufactured goods.
- Primary articles included for the computation of WPI include food articles, non-food articles and minerals.
- In the fuel, power, light and lubricants, electricity, coal mining and mineral oil are included.
- The manufactured goods category encompasses food products; beverages, tobacco, and tobacco products; wood and wood products, textiles; paper and paper products; basic metals and alloys; rubber and rubber products and many others.
- A new WPI series with 2011-12 base year with 676 items in the commodity basket was released. Previously, WPI used a sample set of 435 commodities as an indicator of movement in prices of commodities in all trade and transactions.
- At present the different categories included primary articles, fuel and power and manufactured products bear 22.62%, 13.15% and 64.23% weight age. With 102 items in the primary articles, 19 in fuel and power and in manufactured products that cover primarily all items transacted in the Indian economy.
- The prices are taken from wholesale market.
- It is also the price index which is available on a weekly basis.
- It has the shortest possible time lag of only two weeks ie the data available in the current week is calculated on the basis of prices two weeks back.
WPI is the primary measure that is used by the Indian central government for ascertaining inflation as WPI in contrast to CPI accounts for changes in price at an early distribution stage. WPI index in fact includes all transactions at first point of bulk sale in the domestic market.