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Wholesale Price Index and Consumer Price Index

Wholesale Price Index (WPI) and Consumer Price Index (CPI) are the two important indices that play an important role in setting the prices of the goods and services in the market. These indices are often used to measure inflation in an economy and are important tools for companies, businesses etc., to keep track of the prices of the goods. Let us see how WPI differs from CPI!

Wholesale Price Index:

Wholesale Price Index, which is abbreviated as WPI, is a frequently used price index which shows the changes in the price of the goods for voluminous sale or in the wholesale market. It measures the changes in the prices charged by manufacturers and wholesalers. In other words, it measures the changes in the good's prices at selected stages before they reach to the retailer. In many countries including India, WPI is used to measure the inflation and changes in the average price of goods bought or sold in the wholesale market.

It is released by Office of the Economic Advisor every week to reflect the changes in the average price of a set of goods. In India, the WPI is calculated by studying the price changes of a set of 435 commodities. These commodities represent various strata of the economy and thus believed to give a comprehensive value of the economy.

WPI is recommended by Abhijeet Sen Committee and is used to monitor the price trends that reflect the current supply and demand in the market. The products in WPI can be classified into three types: Primary articles, fuel and power and manufactured items.

Consumer Price Index:

Consumer price index, which is abbreviated as CPI, is a price index that represents the weighted average retail price of a basket of consumer goods and services such as food, medical care, and transportation. It is based on the changes in price at the retail level as it measures the change in the retail price of goods and services consumed by the population of an area in a base year. The CPI is set for eight categories which include education, garment, foods and beverages, communications, transportation, housing and medical care and recreation. CPI is also known as standard retail price (SRP). It is one of the frequently used statistics to identify the periods of inflation or deflation in an economy.

Some of the key differences between Wholesale Price Index and Consumer Price Index are as follows:

Wholesale Price Index (WPI) Consumer Price Index (CPI)
It is a measure of the average change in the prices of goods in the wholesale market or at the wholesale level. It is a measure of change in the retail price of goods and services consumed by a population of an area in a base year.
It is compiled and published by Office of the Economic Advisor on a weekly basis. It is published by Central Statistics Office.
It measures inflation at the first stage of a transaction. It measures inflation at the final stage of a transaction.
It covers only goods. It covers both goods and services.
It is the basis for economic deflation rate. It is the basis for the inflation rate.
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