# 10+ Wholesale Price Index Templates in DOC | PDF | XLS

A wholesale price index, or WPI in short, is an index that calculates and records changes in the price of goods in the pre-retail stage, i.e. goods sold in bulk and exchanged between companies or firms rather than customers. It represents the price of wholesale products as a standard basket. Many countries are using revisions to WPI as key inflation index. However, others use CPI or Customer Price Index to measure inflation.

## Who Publishes the Wholesale Price Index and What Does It Show?

Experts use the statistics to monitor the dynamics of supply and demand in manufacturing, engineering, and construction. The Economic Advisor in the Ministry of Commerce and Industry of the country under question releases the numbers. An upward surge in the wholesale price index printing suggests economic growth in the economy and vice versa.

## Difference Between Customer Price Index and Wholesale Price Index

The Wholesale Price Index (WPI) refers to the price of wholesale products as a generic basket. On the other hand, the Consumer Price Index or CPI, in short, is an indicator that takes into consideration a basket of consumer goods and services, such as transportation, food, and medical care, and calculates their weighted average prices. The job of the wholesale price index is to keep track of the market price of goods. While the task of the consumer price index is to calculate the average price for a basket of specific goods and services that households pay. Even though the WPI is used in some countries as a main measure of inflation, most nations no longer use it for policy purposes such as setting repo rates. Now, most countries use CPI or retail inflation to set monetary and credit policies as a key measure of inflation.

## How to Calculate the Wholesale Price Index?

The wholesale price index (WPI) is focused on the wholesale price of a few related commodities with more than 240 available commodities. The goods selected for the measurement are based on their geographical value, and the point of time the WPI is used. In India, for example, around 435 items have been used in the base year 1993-94 to measure the WPI, whereas the updated the base year 2011-12 uses 697 items. The reference year was updated by the Office of Economic Adviser (OEA), Department of Industry Promotion and the Ministry of Commerce and Industry from 2004-05 to 2011-12 to correlate it with the reference year of other economic measures such as the GDP and the Industrial Production Index (IIP).

The indicator measures individual fluctuations in the price of each commodity. The WPI is calculated using the averaging theory, based on this individual movement. Three methods are mainly used to compute WPI:

1. Laspeyres Formula: The Laspeyres Formula refers to the weighted arithmetic mean dependent on the fixed worth based loads for the base time frame.
2. Ten-Day Price Index: The Ten-Day Price Index is a system within which, every ten days by phone “study rates” with large intra-month volatility are picked and polled. Using the data collected through this process and assuming that other outstanding “inventory rates” remain unchanged, a “ten-day price index” will be computed and published.
3. Monthly price indices are accumulated by measuring the pure arithmetic mean of three “trial rates” over ten days in the month.

## Basic Components of the Wholesale Price Index

1. A key component of the wholesale price index is the main articles that are further subdivided into Food Articles and Non-Food Articles.
2. Food Articles refer to items that are edible such as cereal, wheat, rice, vegetables, fruits, and other similar ones.
3. Non-Food Articles refers to items that are non-edible and used in major operations around the whole to generate revenue such as petroleum, oilseeds, minerals, precious metals, etc.
4. The next big WPI set is Fuel & Energy, which monitors price moves in gasoline, diesel, and LPG.
5. The most important and biggest basket under WPI is manufactured goods. This covers a range of such products, from textiles, apparel, pulp, additives, and fabrics, to cement, metals and more.
6. Also included in the manufactured goods basket are items such as sugar, tobacco products, vegetable and animal oils, and fats.

## Uses of WPI

There are four main uses of the wholesale price index:

1. To provide the market trade cost inflation forecasts for the economy as a whole. It helps to check inflation, especially in basic commodities, before the price increase spills over to retail prices through timely action by the State.
2. For many sectors of the economy, WPI is used as a deflator including for Central Statistics Organization’s calculation of GDP.
3. WPI is also used in commercial contracts for consumer indexation.
4. WPI is also monitored by global investors as one of the main macro metrics for their investment decisions.