Wholesale Price Index

Subject: Economy

Context:

• Wholesale prices in the country have deflated to 3.21 per cent in May due to sharp decline in prices of fuel and power, even as food articles turned expensive.
• The annual rate of inflation, based on monthly Wholesale Price Index (WPI), stood at (-) 3.21 per cent (provisional) for May 2020 as compared to 2.79 per cent during the corresponding month of the previous year

Concept:

• Wholesale Price Index, or WPI, measures the changes in the prices of goods sold and traded in bulk by wholesale businesses to other businesses
• The numbers are released by the Economic Advisor in the Ministry of Commerce and Industry.

WPI Vs CPI

• While WPI keeps track of the wholesale price of goods, the CPI measures the average price that households pay for a basket of different goods and services.
• Even as the WPI is used as a key measure of inflation in some economies, the RBI no longer uses it for policy purposes, including setting repo rates. The central bank currently uses CPI or retail inflation as a key measure of inflation to set the monetary and credit policy.