Source: BS
Context: India’s WPI inflation eased to a 13-month low of 0.85% in April 2025, sharply down from 2.05% in March, driven by falling fuel and primary article prices.
About Wholesale Price Index (WPI):
- What is WPI?
- The Wholesale Price Index (WPI) measures the average change in prices of goods traded in bulk by wholesalers to other businesses.
- It reflects inflation at the producer level, before the goods reach the end consumer.
- Administering Body:
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- Published monthly by the Office of Economic Adviser, under the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry.
- Objective:
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- To track price movements in wholesale markets and assess cost pressures faced by producers and industries.
- Aids in understanding supply-demand dynamics across primary, energy, and manufacturing sectors.
- Base Year and Calculation:
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- Base Year: Updated to 2011–12 (from 2004–05) for alignment with GDP and IIP data.
- Method: Weighted average of prices from a basket of 697 items, across three main groups:
- Primary Articles (22.62%)
- Fuel and Power (13.15%)
- Manufactured Products (64.23%)
- Key Features of WPI:
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- Covers only goods, not services.
- Reflects price trends before retail level, unlike Consumer price index (CPI) which tracks consumer prices.
- Published monthly, showing price changes over the entire month.
- Useful for industry cost analysis, but not used by the RBI for monetary policy decisions.
- Significance of WPI in India:
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- Serves as an early indicator of inflation trends.
- Helps in analysing input cost pressures on producers.
- Essential for fiscal planning, business forecasting, and policymaking.
- Provides insights into sector-specific inflation—crucial for agriculture, mining, energy, and industry.
- Complements CPI in macro-economic analysis, though RBI prefers CPI for interest rate decisions.
