UPSC Articles
Wholesale Price Index (WPI)
Part of: Prelims and GS-III – Economy
Context Wholesale inflation, based on the Wholesale Price Index, jumped to 14.23% in November from 12.54% in October (on a year-on-year basis)
Key takeaways
- It was primarily due to rise in food prices especially of vegetables, and minerals and petroleum product
- This is the highest level of wholesale inflation in the 2011-12 series and eighth consecutive month in which it has stayed at a double-digit level.
- Retail inflation also showed an increase 4.91% despite a cut in excise duty on fuels.
Gap between WPI and CPI inflation
- Despite not being a policy tool, the surge in the WPI is a cause of worry.
- While the CPI-based retail inflation looks at the price at which the consumer buys goods, the WPI tracks prices at the wholesale, or factory gate/mandi levels.
- Between the wholesale price and the retail price, the difference essentially is the former only tracks basic prices devoid of transportation cost, taxes and the retail margin etc.
- WPI takes only goods into account, not services.
- WPI is primarily used as a GDP deflator
