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What are the differences between Wholesale Price Index & Consumer Price Index?

06-FEB-2018 05:08
    Difference CPI & WPI

    Meaning of inflation:

    Inflation is a market situation in which the price of goods and services increases consistently over a period of time. So inflation reduces the value of money hence too much money chases to few goods.

    There are various methods to calculate inflation i.e. Wholesale Price Index (WPI), Consumer Price Index (CPI), Producer Price Index (PPI), Commodity Price Index, Cost of Living Index, Capital Goods Price Index and GDP Deflator. But WPI and CPI are widely used indexes to calculate inflation all over the world.

    This article is explaining the differences between the WPI and CPI.

    What is Consumer Price Index (CPI)?

    Consumer Price Index (CPI) is a price index which represents the average price of a basket of goods over time. CPI calculates the average price paid by the consumer to the shopkeepers.

    Education, communication, transportation, recreation, apparel, foods and beverages, housing and medical care are the 8 groups for which the CPI is measured.

    (A retailer)

    CPI example

    Economic Survey Report 2017-18: Key Facts

    What Is Wholesale Price Index (WPI)?

    Wholesale Price Index (WPI) is an indicator of price changes in the wholesale market.  WPI calculates the price paid by the manufacturers and wholesalers in the market. WPI measure the changes in commodity price at selected stages before goods reach to the retail level.

    (A wholesaler)

    wpi example

    Difference between WPI and CPI is as follows;

    Basis For Comparison

    Wholesale Price Index (WPI)

    Consumer Price Index (CPI)

     Meaning

     WPI, amounts to the average change in prices of commodities at wholesale level

     CPI, indicates the average change in the prices of commodities, at the retail level.

     Published by

     Office of Economic Advisor (Ministry of Commerce & Industry)

     Central Statistics Office (Ministry of Statistics and Programme Implementation)

     Measures prices  of

     Goods only

     Goods and Services both

     Measurement of  Inflation

     First stage of transaction

     Final stage of transaction

     Prices paid by

     Manufacturers and wholesalers

     Consumers

     How many items covered

    697 (Primary, fuel & power and manufactured products)

     448(Rural Basket)

     460 (Urban Basket)

     What type of items covered

     Manufacturing inputs and intermediate goods like minerals, machinery basic metals etc.

     Education, communication,  transportation, recreation, apparel, foods and beverages, housing and medical care

     Base year

     2011-12

     2012

     Used by

     Only a few countries including India

     157 countries

     Data released on

      Primary articles, fuel and power (Weekly basis) &

    overall (monthly basis since 2012)

     Monthly basis

    So from the above table, it must be clear that what are the differences between the CPI & WPI indexes. Here it is worth to mention that CPI is worldwide accepted mode of calculating the inflation as compared to the WPI.

    Is inflation always bad for the economy

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