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Whole Sale Price Index 
 Wholesale price indexes (WPIs) report monthly to show the 
average price changes of goods sold in bulk, and they are a 
group of the indicators that helps to measure the inflation 
and growth in the economy. 
 An index that measures and tracks the changes in price of 
goods in the stages before the retail level. 
 It is calculated for wholesale prices in which the quantities 
of the base year and current year are different
Countries Used 
 Initial Usage By – India Philippines 
 India Used WPI to calculate inflation from 1902 till 
1978 
 RBI Governor D.Subbarao implemented PPI in India. 
 Most of the Developed countries like United States 
uses PPI
Functions & Uses 
 It is used by the Reserve Bank of India and the Government of India to 
frame their monetary and fiscal policies and to take appropriate 
corrective steps during inflationary periods 
 It is also utilized for purposes like forecasting changes in business 
conditions indicating supply-demand relationships 
 Conventionally, it has been used to measure the variations in exchange 
value or purchasing power of money 
 Other organizations like the Planning Commission base their various 
schemes on the price trends revealed by the index numbers of 
wholesale prices
Advantages & Disadvantages 
Advantages 
 It represents the wholesale trade transactions of all the 
commodities produced and traded in the system 
 It is available on a monthly basis with the least time lag 
 It is quite handy for purposes of comparisons 
Disadvantages 
 Includes only Goods and excludes services 
 Prices are captured mainly through mandis or through 
whole sale transaction places 
 They Do not reflect the prices paid by the consumer
Construction methodology 
 Manufactured articles - 64.97% 
 Primary article - 20.12% 
 Fuel, power, light and lubricants - 14.91% 
 Each item was assigned equal weight 
 There will be a single price quotation for each item
Index Calculation 
 It is calculated on the principle of weighted arithmetic mean, according to 
the Lasperyre’s formula which has a fixed base-year weighting diagram 
operative through the entire life span of the series. 
I= Σ (Ii . Wi)/Σ Wi 
 Where, 
I = Index Number of wholesale prices of a sub group/group/ major 
group/all commodities 
Wi = The weight assigned to the ith item/sub-group/group/major 
group. 
Ii = Index of the ith item/subgroup/group/major group 
 The monthly WPI at the time of its initial compilation and release is 
provisional as it does not take into account some of the price quotations that 
are received belatedly. 
 The prices of the missing quotations are either repeated or estimated 
depending on the nature of the commodity.
Example 
Thus the manufactured 
products index stands at I 
= Σ (Ii . Wi)/Σ Wi 
= 1597.38/14.23 
= 38.74 
Similarly the Primary articles 
and Manufacturing index 
can be calculated and 
assume it is 46.35 and 29.78 
respectively 
Thus the value of WPI index for the month is ‘x’ is equal to 
= Fuel, Lights Index + Manufactured products Index + Primary articles Index 
= 38.74+46.35+29.78 
= 114.87
Thus the new manufactured 
Product index value is 
=1614.73/41.2 
=39.16 
Corresponding value for the 
primary articles and manufacturing 
index At 46.63 and 32.63 
respectively 
Thus the value of WPI index is at the 
End of week stands at 
=39.16+ 46.63+32.63 
=118.42 
Thus the index has grown by 3.09% in the month compared to its value in week ‘x’ 
For the month ended the inflation rate in India is at 3.09%
 The commodities chosen for the calculation are based on 
their importance in the region and the point of time the WPI is 
employed 
 India used 435 items in 1993-94 
676 items in 2010-14 
 now India has adopted new CPI to measure inflation 
 Since 2009 it has been made monthly basis of generating WPI
Present Index 
 Indian wholesale price index rose 3.74 percent year-on-year 
in August of 2014, slowing from a 5.19 percent increase in 
July. It is the lowest rate since October of 2009 mainly due 
to a fall in prices of vegetables and oil.
WPI comparison
Bibliography 
 http://www.tradingeconomics.com/india/producer-prices- 
change 
 http://pib.nic.in/newsite/erelease.aspx?relid=94679 
 http://www.cso.ie/en/media/csoie/releasespublication 
s/documents/periodicals/2002/prices_2002.pdf 
 http://www.wikipedia.org/ 
 http://eaindustry.nic.in/home.asp

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Whole Sale Price Index

  • 1. Whole Sale Price Index  Wholesale price indexes (WPIs) report monthly to show the average price changes of goods sold in bulk, and they are a group of the indicators that helps to measure the inflation and growth in the economy.  An index that measures and tracks the changes in price of goods in the stages before the retail level.  It is calculated for wholesale prices in which the quantities of the base year and current year are different
  • 2. Countries Used  Initial Usage By – India Philippines  India Used WPI to calculate inflation from 1902 till 1978  RBI Governor D.Subbarao implemented PPI in India.  Most of the Developed countries like United States uses PPI
  • 3. Functions & Uses  It is used by the Reserve Bank of India and the Government of India to frame their monetary and fiscal policies and to take appropriate corrective steps during inflationary periods  It is also utilized for purposes like forecasting changes in business conditions indicating supply-demand relationships  Conventionally, it has been used to measure the variations in exchange value or purchasing power of money  Other organizations like the Planning Commission base their various schemes on the price trends revealed by the index numbers of wholesale prices
  • 4. Advantages & Disadvantages Advantages  It represents the wholesale trade transactions of all the commodities produced and traded in the system  It is available on a monthly basis with the least time lag  It is quite handy for purposes of comparisons Disadvantages  Includes only Goods and excludes services  Prices are captured mainly through mandis or through whole sale transaction places  They Do not reflect the prices paid by the consumer
  • 5. Construction methodology  Manufactured articles - 64.97%  Primary article - 20.12%  Fuel, power, light and lubricants - 14.91%  Each item was assigned equal weight  There will be a single price quotation for each item
  • 6. Index Calculation  It is calculated on the principle of weighted arithmetic mean, according to the Lasperyre’s formula which has a fixed base-year weighting diagram operative through the entire life span of the series. I= Σ (Ii . Wi)/Σ Wi  Where, I = Index Number of wholesale prices of a sub group/group/ major group/all commodities Wi = The weight assigned to the ith item/sub-group/group/major group. Ii = Index of the ith item/subgroup/group/major group  The monthly WPI at the time of its initial compilation and release is provisional as it does not take into account some of the price quotations that are received belatedly.  The prices of the missing quotations are either repeated or estimated depending on the nature of the commodity.
  • 7. Example Thus the manufactured products index stands at I = Σ (Ii . Wi)/Σ Wi = 1597.38/14.23 = 38.74 Similarly the Primary articles and Manufacturing index can be calculated and assume it is 46.35 and 29.78 respectively Thus the value of WPI index for the month is ‘x’ is equal to = Fuel, Lights Index + Manufactured products Index + Primary articles Index = 38.74+46.35+29.78 = 114.87
  • 8. Thus the new manufactured Product index value is =1614.73/41.2 =39.16 Corresponding value for the primary articles and manufacturing index At 46.63 and 32.63 respectively Thus the value of WPI index is at the End of week stands at =39.16+ 46.63+32.63 =118.42 Thus the index has grown by 3.09% in the month compared to its value in week ‘x’ For the month ended the inflation rate in India is at 3.09%
  • 9.  The commodities chosen for the calculation are based on their importance in the region and the point of time the WPI is employed  India used 435 items in 1993-94 676 items in 2010-14  now India has adopted new CPI to measure inflation  Since 2009 it has been made monthly basis of generating WPI
  • 10. Present Index  Indian wholesale price index rose 3.74 percent year-on-year in August of 2014, slowing from a 5.19 percent increase in July. It is the lowest rate since October of 2009 mainly due to a fall in prices of vegetables and oil.
  • 12. Bibliography  http://www.tradingeconomics.com/india/producer-prices- change  http://pib.nic.in/newsite/erelease.aspx?relid=94679  http://www.cso.ie/en/media/csoie/releasespublication s/documents/periodicals/2002/prices_2002.pdf  http://www.wikipedia.org/  http://eaindustry.nic.in/home.asp