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Wholesale Price Index (WPI)
Consumer Price Index (CPI)
The sustained increase in general prices of goods and services over time is called inflation. WPI and CPI are two primary measures of inflation.
WPI reflects the average change in price of goods that are bought and sold in the wholesale market. The various commodities taken into consideration for computing the WPI can be categorized into primary articles, fuel, power and manufactured goods.
- Primary articles include food articles, non-food articles and minerals
- Fuel includes power, light and lubricants, electricity, coal mining and mineral oil
- 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.
An important point to make note of is that WPI does not include the cost of services.
CPI is computed by executing a weighted average on a set of goods and services. The computation of CPI takes into account the actual inflation that affects the end consumer. CPI is thus a reflection of changes in the retail price of goods and services.
As WPI accounts for changes in prices of goods at a wholesale level, it fails to reflect the actual burden borne by the end consumer.
However, WPI is the primary measure that is used by the Indian central government to measure inflation.
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