A
Wholesale Price Index (WPI) is the price of
a representative basketA price index is a normalized average of prices for a given class of goods or services in a given region, during a given interval of time...
of
wholesaleWholesaling, jobbing, or distributing the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services....
goods. Some countries (like
IndiaIndia, officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal...
and The Philippines) use WPI changes as a central measure of
inflationIn economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also an erosion in the purchasing power of money – a loss of real...
. However,
IndiaIndia, officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal...
and the
United StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
now report a
producer price indexA Producer Price Index measures average changes in prices received by domestic producers for their output. It is one of several price indicesIts importance is being undermined by the steady decline in manufactured goods as a share of spending....
instead.
The Wholesale Price Index or WPI is the price of a representative basket of wholesale goods. Some countries use the changes in this index to measure inflation in their economies, in particular India – The Indian WPI figure is released weekly on every thursday and influences stock and fixed price markets.
Discussion
Ask a question about 'Wholesale price index' Start a new discussion about 'Wholesale price index' Answer questions from other users |
A
Wholesale Price Index (WPI) is the price of
a representative basketA price index is a normalized average of prices for a given class of goods or services in a given region, during a given interval of time...
of
wholesaleWholesaling, jobbing, or distributing the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services....
goods. Some countries (like
IndiaIndia, officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal...
and The Philippines) use WPI changes as a central measure of
inflationIn economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also an erosion in the purchasing power of money – a loss of real...
. However,
IndiaIndia, officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal...
and the
United StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
now report a
producer price indexA Producer Price Index measures average changes in prices received by domestic producers for their output. It is one of several price indicesIts importance is being undermined by the steady decline in manufactured goods as a share of spending....
instead.
The Wholesale Price Index or WPI is the price of a representative basket of wholesale goods. Some countries use the changes in this index to measure inflation in their economies, in particular India – The Indian WPI figure is released weekly on every thursday and influences stock and fixed price markets. The Wholesale Price Index focuses on the price of goods traded between corporations, rather than goods bought by consumers, which is measured by the Consumer Price Index. The purpose of the WPI is to monitor price movements that reflect supply and demand in industry, manufacturing and construction. This helps in analyzing both macroeconomic and microeconomic conditions.
Calculation of Wholesale Price Index
The wholesale price index consists of over 2,400 commodities. The indicator tracks the price movement of each commodity individually. Based on this individual movement, the WPI is determined through the averaging principle. The following methods are used to compute the WPI:
Laspeyres Formula (relative method):It is the weighted arithmetic mean based on the fixed value-based weights for the base period.
Ten-Day Price Index: Under this method, “sample prices” with high intra-month fluctuations are selected and surveyed every ten days through phone. Utilizing the data retrieved by this procedure and with the assumption that other non-surveyed "sample prices" remain unchanged, a "ten-day price index" is compiled and released.
Calculation Method: Monthly price indexes are compiled by calculating the simple arithmetic mean of three ten-day “sample prices” in the month.