The Wholesale Price Index (WPI) is a statistical measure and concept that tracks the average change in prices of a fixed basket of goods at the wholesale or producer level, before they reach the final consumer. It is India's primary indicator of wholesale inflation, reflecting price pressures on the supply side of the economy. The WPI is compiled and released monthly by the Office of the Economic Adviser (OEA) under the Ministry of Commerce and Industry.
The recorded history of the WPI in India dates back to the pre-Independence era, with the first edition issued in 1942, using the base year 1939. The index was created to monitor price movements that reflect supply and demand in industry and manufacturing.
The current WPI series uses the base year 2011-12. It tracks 697 commodities grouped into three major components: Manufactured Products (64.23% weight), Primary Articles (22.62% weight), and Fuel & Power (13.15% weight). The index is calculated using the Laspeyres formula. WPI inflation is measured on a point-to-point basis, comparing the index value in a given month to the same month in the previous year.
The WPI is closely connected to the Consumer Price Index (CPI), which measures retail-level inflation and includes services, unlike the WPI which only covers goods. The WPI is used as a deflator for macroeconomic aggregates like Gross Domestic Product (GDP). While the Reserve Bank of India (RBI) previously used the WPI, it adopted the CPI as its key measure for monetary policy decisions in April 2014.
The base year was last revised from 2004-05 to 2011-12 on May 12, 2017. A significant change in this revision was the exclusion of indirect taxes from the price calculation to align the WPI closer to a global Producer Price Index (PPI). The government is currently working on a further revision to the base year 2022-23.