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Wholesale Price Index

  • Office of Economic Advisor (OEA), Department of Industrial Policy and Promotion, Ministry of Commerce and Industry calculates the WPI.

  • Wholesale Price Index (WPI) measures the average change in the prices of commodities for bulk sale at the level of early stage of transactions. The index basket of the WPI covers commodities falling under the three Major Groups namely Primary Articles, Fuel and Power and Manufactured products. The prices tracked are ex- factory price for manufactured products, agri-market (mandi) price for agricultural commodities and ex-mines prices for minerals. Weights given to each commodity covered in the WPI basket is based on the value of production adjusted for net imports. WPI basket does not cover services.

  • The monthly index of wholesale prices at the time of its initial compilation and release is provisional in nature because it does not take into account some of the price quotations that are received belatedly. In such cases, the prices of the missing quotations are either repeated or estimated depending on the nature of the commodity.

  • Provisional WPI is released with a time lag of two weeks of the reference month and is initially provisional. After eight weeks, the index is finalized and final figures are released and then frozen thereafter. Thus, no further changes are incorporated in the index after 10 weeks. Because of this approach, delayed responses from data sources can only be included retrospectively only up to 8 weeks. Though the delayed responses are captured for more current period and the index gets aligned to recent prices, the back series of the index (of earlier weeks) may continue to differ as it is frozen. There may also be some problems of non-response for a particular commodity/item or commodity/group, which delay the alignment for a considerable period.

  • The base year of All-India WPI has been revised from 2004-05 to 2011-12 by the Office of Economic Advisor (OEA), Department of Industrial Policy and Promotion, Ministry of Commerce and Industry. The current revision of WPI is based on the recommendations of Working Group constituted under the chairmanship of Late Dr. Saumitra Chaudhuri, Ex Member, erstwhile Planning Commission which submitted its report in March 2014.

  • WPI will constitute 3 Major Groups namely Primary Articles, Fuel & Power and Manufactured Products.

  • Increase in number of items from 676 to 697. In all 199 new items have been added and 146 old items have been dropped. The index basket of the new series has a total of 697 items including 117 items for Primary Articles, 16 items for Fuel & Power and 564 items for Manufactured Products.

W eigh t Major Groups / Gro up s C dities Primary Articles Fuel and Power M anufac ture d Product s 2004-05 676 102 19 555 2011-12 No. of Items D ropped No. of Quotations 2004-05 100.00 2012 1491 64_ 97 2011-12 100.00 22.62 13.15 64.23 697 117 16 -12 series. C ommon 92 15 391 Revi s ed 146 11_970/0 2 135 N ew added revised 199 4.22% 25 173 2004-05 5482 579 72 4831 2011-12 8331 983 442 6906 * Weight ofthe items convonds to 2011 # Weight of the items comesponds 2004-05 series

  • The new series is more representative with increase in number of quotations from 5482 to 8331.

  • A new “WPI Food Index” will be compiled to capture the rate of inflation in food items.
A new “Food Index” is being compiled combining the “Food Articles” under “Primary Articles” and “Food Products” under “Manufactured Products”. Together with the Consumer Food Price Index released by Central Statistics Office, this would help monitor the price situation of food items better.

  • In the new series of WPI, prices used for compilation do not include indirect taxes in order to remove impact of fiscal policy. This is in consonance with international practices and will make the new WPI conceptually closer to ‘Producer Price Index’.

Producer Price Index (PPI) measures the average change in the price of goods and services either as they leave the place of production, called output PPI or as they enter the production process, called input PPI. PPIs can be compiled separately for Out PPIs, Input PPIs and Export and Import PPIs.

WPI does not cover services and whereas PPI includes services.

  • WPI is used as a deflator for nominal macroeconomic aggregates like GDP and Index of Industrial Production (IIP). Since the nominal estimates of GVA for different sectors are computed at basic price exclusive of taxes on products taxes, excluding indirect taxes from WPI makes it a compatible and appropriate deflator.

  • Item level aggregates for new WPI are compiled using Geometric Mean (GM) following international best practice and as is currently used for compilation of All India CPI.

  • In order to address important technical issues such as substitution of source of data, change in specification of products and other data/methodological issues which require continuous review on a dynamic basis so that the new WPI series remains relevant till the life of the series, an institutional mechanism has been established for the first time for facilitating seamless substitution of dormant source, dynamic revision of item list of products and the panel of factories through Technical Review Committee (TRC) chaired by Secretary, Department of Industrial Policy & Promotion. This committee will meet at least once a year for inter-alia recommending methodology for improving the coverage and quality of WPI like identifying new items that need to be included in the item basket and removing those that have lost its relevance or are no longer being produced.

  • The major changes in weights, number of items and quotations between WPI 2004-05 and WPI 2011-12 are given in the table below -

Major Group ALL COMMODITIES PRIMARY ARTICLES FUEL & POWER MANUFACTURED PRODUCTS Weights No. 2004-05 676 102 19 555 of I terns 2011-12 697 117 16 564 No. of Quotations 2004-05 100.00 20.12 14.91 64.97 2011-12 100.00 22.62 13.15 64.23 2004-05 5482 579 72 4831 2011-12 8331 983 442 6906

  • In the Fuel and Power Major Group, the index for non-coking coal will also be available at a disaggregated level based on Gross Calorific Value ( GCV) to cater to the requirements of diverse user groups.

  • The index for electricity in the new series will be compiled as a single item in comparison to the separate indices according to usage in agriculture, industry, domestic, commercial, and railways in 2004-05 series. In the new series, monthly average rate of sale of power of 49 selected generating stations covering Hydro and Thermal sectors is being used to compile the index for electricity.

  • The number of 2 digit groups in Manufactured products has been increased from 12 to 22 in keeping with NIC- 2008.

PRIMARY ARTICLES (Weight 22.62%)
  • Food Articles
  • Non-Food Articles
  • Minerals

FUEL & POWER (Weight 13.15%)
  • Mineral Oils

MANUFACTURED PRODUCTS (Weight 64.23%)
  • Manufacture of Food Products
  • Manufacture of Tobacco Products
  • Manufacture of Textiles
  • Manufacture of Wearing Apparel
  • Manufacture of Leather and Related Products
  • Manufacture of Wood and of Products of Wood and Cork
  • Manufacture of Paper and Paper Products
  • Printing and Reproduction of Recorded Media
  • Manufacture of Chemicals and Chemical Products
  • Manufacture of Pharmaceuticals, Medicinal Chemical and Botanical Products
  • Manufacture of Rubber and Plastics Products
  • Manufacture of Other Non-Metallic Mineral Products
  • Manufacture of Basic Metals
  • Manufacture of Fabricated Metal Products, Except Machinery and Equipment
  • Manufacture of Computer, Electronic and Optical Products
  • Manufacture of Electrical Equipment
  • Manufacture of Machinery and Equipment
  • Manufacture of Motor Vehicles, Trailers and Semi-Trailers
  • Manufacture of Other Transport Equipment
  • Manufacture of Furniture
  • Other Manufacturing etc.

WPI FOOD INDEX (Weight 24.38%)


The rate of inflation based on WPI Food Index consisting of ‘Food Articles’ from Primary Articles group and ‘Food Product’ from Manufactured Products group.
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