What are the differences between Wholesale Price Index & Consumer Price Index?
The difference in CPI and WPI: Wholesale Price Index (WPI) and Consumer Price Index (CPI) are two widely used indexes to calculate the inflation in the country. India uses the WPI index to calculate inflation while most of the countries use CPI for the same.
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 too 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 the Consumer Price Index (CPI)? |
Consumer Price Index (CPI) is a price index that 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)
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 measures the changes in commodity price at selected stages before goods reach the retail level.
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 the 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 | The first stage of the transaction | The final stage of the 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 mentioning that CPI is a worldwide accepted mode of calculating the inflation as compared to the WPI