Wholesale Price Index (WPI)

  • IASbaba
  • December 15, 2021
  • 0
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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

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