TOPIC OF THE DAY

Economy: Wholesale Price Index (WPI)

• It measures the average change in the prices of commodities for bulk sale at the first stage of transactions. (i.e. Wholesale price).
• This helps in timely intervention by the Government to check inflation, particularly in essential commodities, before the price increase spills over to retail prices.
• The prices tracked are ex-factory price for manufactured products, agri-market (mandi) price for agricultural commodities and ex-mines prices for minerals.
• Prices do not include indirect taxes in order to remove the impact of fiscal policy.
• The Wholesale Price Index covers prices of products/commodities only pertaining to four sectors comprising agriculture, mining, manufacturing and electricity.
• The other sectors of GDP, in particular, the services sector are not covered under WPI.

Uses: It is used as a deflator for many sectors of the economy for estimating GDP. It is also used to deflate nominal (current) values of production in the Index of Industrial Production (IIP).WPI is also used for indexation/escalation in business contracts.

Issued: Monthly, on 14th day of the following month. If it is a holiday, then it is released on the next working day. It is issued by Office of economic adviser, DPIIT, Ministry of Commerce & Industry.

Commodities & Weight (total items 697)

1) PRIMARY ARTICLES (Weight 22.62%) (Items 117)

(in Primary articles, Food articles weight is highest 15.26%)

2) FUEL & POWER (Weight 13.15%) (Items 16)

3) MANUFACTURED PRODUCTS (Weight 64.23%) (Items 564)

(in Manufactured Products, Manufacture of Food Products weight is 9.12% second-highest and Highest weight is of Basic metals 9.65%).

Weights given to each commodity covered in the WPI basket is based on the value of production adjusted for net imports in the base year 2011-12.