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Wholesale Price index-A Measure of Inflation

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- 1. A benchmark for inflation<br />Presented By:-<br />Parampalsingh 500901037<br />ShawetaWadhawan 500801518<br />ShrayJali 500901062<br />VivekRaina 500901068<br />
- 2. Wholesale price index<br /><ul><li>The price of a representative basket of wholesale goods
- 3. Central measure of inflation
- 4. Focuses on the price of goods traded between corporations
- 5. Released weekly on every Thursday and influences stock and fixed price markets
- 6. Price movement of each commodity individually determines the WPI through the averaging principle. </li></li></ul><li>Wholesale price index<br /><ul><li>The wholesale price index comprises of the following indices:
- 7. Domestic Wholesale Price Index (DWPI)
- 8. Export Price Index (EPI)
- 9. Import Price Index (IPI)
- 10. Overall Wholesale Price Index (OWPI)</li></li></ul><li>Origin & history<br /><ul><li>The Office of the Economic Adviser to the Government of India published for the first time WPI with base week ended August 19, 1939, from the week commencing January 10, 1942
- 11. Index was calculated as the GM of the price relatives of 23 commodities
- 12. These commodities were classified into four groups
- 13. Food & Tobacco
- 14. Agricultural commodities
- 15. Raw materials
- 16. Manufactured articles
- 17. Each item was assigned equal weight
- 18. There was a single price quotation for each item</li></li></ul><li>Situation upto FY 2009-2010<br /><ul><li>1st April, 2000
- 19. Weights are assigned on the basis of the entire wholesale transactions
- 20. The base year was 1993-94
- 21. Three broad sectors namely,
- 22. Primary Articles
- 23. Fuel, Power, Light and Lubricants
- 24. Manufactured Products</li></li></ul><li>Comparative study<br />Source: http://eaindustry.nic.in/pib.htm<br />
- 25. Setting up of wpi<br /><ul><li>Finalization of the base year
- 26. Finalization of the item basket
- 27. Finalizing Classification structure
- 28. Allocation of weights at major groups/ sub groups
- 29. Finalization of item specification and sources of collection
- 30. Collection of price
- 31. Calculation of index</li></li></ul><li>Fixing the base year<br /><ul><li> Base Price index= 100
- 32. Changes not before 5 years and not after 10 years
- 33. Previous base years were 1970-71, 1981-82, 1993-94
- 34. Criterion
- 35. Normal year with no abnormalities in trade and production, without any political disturbances, wars, natural calamities
- 36. Data should be available for that year
- 37. Year should be as recent as possible
- 38. Comparable with other data series in national and state level</li></li></ul><li>Classification<br />
- 39. Weights assignment<br /><ul><li> Allocation of weights is done based on the traded value of the item
- 40. But for agricultural commodities it is difficult to obtain the traded value so marketed value(MV) is used
- 41. MV= Marketed Surplus Ratio(MSR) X Value of Production (VoP)
- 42. VoP depends on quantity of production and an average price of commodity
- 43. MSR is ratio of marketed quantity and quantity of production</li></li></ul><li>Calculation of wpi<br /><ul><li>Laspeyres Formula (relative method): It is given by the formula as :
- 44. Ten-Day Price Index:
- 45. Calculation Method:</li></li></ul><li>Linking Factor<br /><ul><li>Methods for linking a new series with an old one</li></ul>i) Arithmetic conversion method <br />ii) Ratio method<br />iii) Regression method<br /><ul><li>The office of the Economic Adviser uses the arithmetic conversion method
- 46. The linking factor for the all commodities index is 2.478 for conversion of indices from the base 1993-94 series to the earlier base 1981-82.</li></li></ul><li>Trend over the years<br />
- 47. Current Situation of <br />Wholesale Price Index<br />
- 48. Snapshot<br />
- 49. Snapshot<br />
- 50. Snapshot<br />
- 51. Snapshot<br />
- 52. Snapshot<br />
- 53. Snapshot<br />
- 54.
- 55.
- 56. Snapshot<br />
- 57. How to calculate inflation<br /><ul><li>The formula for calculating the Inflation Rate</li></ul> (B - A) * 100<br /> A<br />
- 58. Snapshot<br />
- 59. Problems with WPI<br /><ul><li>Wholesale markets for products like cars may not exist
- 60. WPI doesn’t take the price of services into consideration
- 61. Some commodities may have higher weights during a particular period and may not be consumed during other</li></li></ul><li>

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