What is WPI (Whole Sale Price Index)?

WPI is a price index representing the wholesale prices of a basket of goods. In several countries such as India it is used to measure the inflation, the general rise in the prices of Goods.

In India, it is released on weekly basis  on every Thursday. So You will notice the news about it on every Friday newspapers.

According to its name suggests, it does not take into account the price at which the consumers buy goods but it shows the price on whole sale basis. The rationale of having WPI is to know the demand and supply condition of goods included in the economy.

Earlier in India, the base year for the calculation of WPI was 1981-82 but from 2000, the revised base year is 1993-94.

What is Comprehensive WPI?

The new Comprehensive WPI is expected to be functional from 2010. For the current index the data is sourced from around 2000 companies, whereas for the new index prices will be sourced from over 6000 companies. The base year for the new index is going to be 2004-05.

Also the number of products included for the calculation of WPI will increase from 435 to 1224 as many new products such as cell phones, laptops and digital cameras will be added.

What is the Difference between WPI & CPI (Consumer Price Index)? -

While WPI represents the wholesale prices of goods, CPI indicates the average price paid by house holds for a basket of goods and services.

It is also used to measure the inflation. There are 4 kind of CPIs released.

- CPI for Urban Non-manual Employees
- CPI for Rural Labourers
- Agricultural Labourers
- Industrial Workers

Financial Planners use inflation calculated based on CPI for the Financial planning of their clients because CPI is based on price that consumer pay.

Recently, Indian and USA come out with Producer Price Index. For UK, it is called retail price index. In Canada, CPI is published on Monthly basis.