The Wholesale Price Index, or WPI, is an index that measures inflation by tracking the changes in wholesale prices between businesses and manufacturers. The Wholesale Price Index stands in contrast with the Consumer Price Index. WPI and CPI differ from each other in how CPI measures the change in prices at the retail level, rather than at the production level. WPI is one of several metrics used to identify periods of inflation or deflation. It can also be used to estimate the purchasing power of a country's currency. WPI is calibrated to "100"as a baseline by using a weighted average cost of goods during a WPI base year which varies by country. So a WPI of 125 indicates a 25% increase in the level of inflation compared to the baseline years. Calculating the current rate of inflation will compute the % change in the Wholesale Price Index between two time periods, such as year over year. For example, the Office of the Economic Adviser in India published a WPI of 114.1 in 2017 and 118.9 in 2018. (118.9-114.1) divided by 114.1 equals a 4.2% inflation year over year based on the WPI. Today, many countries use a WPI as a measurement of their economies' health. However, the U.S. stopped using the WPI in 1978 and instead uses the Producer Price Index, or PPI, which is a more detailed version of the Wholesale Price Index. WPI and Inflation
What Is WPI?
How Is WPI Used in the Modern Day?
Wholesale Price Index (WPI) FAQs
The Wholesale Price Index (WPI) is a measure of the average changes in the prices of goods traded in the wholesale market.
The Wholesale Price Index is significant because it provides policymakers with an early warning signal of inflationary pressures in an economy. Business owners and investors also use the WPI to make informed decisions.
The Wholesale Price Index is calculated based on the prices of a basket of goods that are traded in the wholesale market. The basket of goods includes primary, intermediate, and finished goods, such as food articles, minerals, crude oil, and manufactured products.
The Wholesale Price Index has several limitations, including its focus only on the wholesale market, its exclusion of services, and the potential for incomplete data and changes in measurement techniques to affect its accuracy.
To stay up-to-date with the latest developments in the Wholesale Price Index, individuals and organizations can regularly monitor news reports, economic data releases, and other relevant sources of information.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.
