What does Wholesale Price Index for inflation in India mean?

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What does Wholesale Price Index for inflation in India mean?
Inflation in general is measured as any increase in prices that is recorded month-on-month. The Wholesale Price Index India gives a good indication of where wholesale prices in India are headed.

What is wholesale price index?

A price index is nothing, but one that reflects the changes of prices over a period of time. Thus, in India to measure wholesale price index (WPI), a monthly wholesale price index is computed. For example for the month of August the WPI inflation came in at at 3.59 per cent, the lowest in the last 5 years. The was taking into account a host of indexes.

There is no wholesale price index definition, but, we can tell you what it comprises of.

In India it comprises of the following: 

1) Primary articles index

This is a very important indication in computing WPI inflation. It has a weightage of almost 20.12 per cent in the total WPI Index. The index comprises of articles like:

a) Non Food Articles

1) Logs and Timber

2) Raw Rubber

3) Soya Bean

4) Raw Cotton

5) raw Silk

6) Raw Jute

7) Apart from this it also comprises mesta, rape & mustard seed copra (coconut) and fodder, groundnut seed and guar seed.  

b) The primary articles index also has:

1) Minerals'

2) Zinc concentrate

3 ) Iron Ore

4) Crude Petroleum

5) Copper ore

6) Magnesite

7) Sillimanite etc.

2) Fuel and Power

In the Wholesale Price Index this group has a weightage of 14.91 per cent. This group includes the likes of fuel including aviation fuel and Naptha.

c) Manufactured Products Index

The Third most important index when calculating Wholesale Price Index Inflation is manufactured products inflation. This comprises index for
1) Food products

2) Beverages, Tobacco & Tobacco Products

3) Textile Group

4) ‘Wood & Wood Products' group

5) ‘Paper & Paper Products'

6) Leather and Leather products group

7) ‘Rubber & Plastic Products'

8) Chemical and Chemical products

9) Metals and Machinery Tools

10) ‘Transport, Equipment & Parts' group


Clearly, the Wholesale Price Index is a pretty complicated index to compute. The government and the relevant authorities have a whole lot of things to gather, especially the data. There is also another data called the CPI inflation or the retail inflation data. To know the difference between WPI and CPI inflation click here


Story first published: Thursday, September 18, 2014, 12:13 [IST]
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