Wholesale Price Index (WPI), Commodity Group, Weightage, Uses, who publishes, Methodology

🚩Timestamps:-

00:07 Session Agenda

01:17 Wholesale Price Index (WPI)

04:19 COMMODITY GROUP AND WEIGHTAGE OF WHOLESALE PRICE INDEX

07:48 USES OF WHOLESALE PRICE INDEX

13:57 Who publishes wholesale price index?

14:18 Calculating WPI: the Methodology

18:26 Concluding Remarks

Learning Outcomes:-

Through this module, you will gain understanding on:-

1.   Wholesale Price Index (WPI)

2.   COMMODITY GROUP AND WEIGHTAGE OF WHOLESALE PRICE INDEX

3.   USES OF WHOLESALE PRICE INDEX

4.   Who publishes wholesale price index?

5.   Calculating WPI: the Methodology

Wholesale Price Index (WPI)

The Wholesale Price Index (WPI) measures the relative changes in the prices of commodities traded in the wholesale markets. In India, the wholesale price index numbers are constructed on weekly basis.

·        In India, the new Wholesale Price Index (WPI) series with base 2004-05 = 100 became effective from 2010 shifting from the earlier base of 1999-2000. The Government plans to further shift the base year to 2011-12. However, detailed modalities of this change are yet to be worked out.

·        Presently, 2011-12 is being used as the base year.

COMMODITY GROUP AND WEIGHTAGE OF WHOLESALE PRICE INDEX

In India, all the commodities have been classified in the following three groups:

 

Commodity Group	Name of commodities	Weightage % (2011-12 series)
(1) Primary Articles	These include commodities like Rice, Fruits, Pulses, Vegetables and non-food articles like Cotton, Jute, metals.	22.62
(2) Fuel, Power, Light and Lubricants	These include items like Coal, Petroleum Products, Electricity, LPG	13.15
(3) Manufacturing	It includes items like Textiles, Sugar, Paper, Machinery, Chemicals, Fertilizers, Leather, etc.	64.23

USES OF WHOLESALE PRICE INDEX

 (1) Forecasting Demand and Supply:

The wholesale price indices are often used to forecast demand and supply situation in the economy. An increase in wholesale price index is an indication of excess demand. It is a situation in which demand is greater than supply. On the other hand, a decrease in wholesale price index implies deficient demand. It is a situation in which demand is less than supply.

 

(2) Estimation of Monetary Value and Real Value:

The wholesale price index can be used to estimate the monetary value and real value of aggregates like national income and expenditure. Monetary value is the value estimated at current year prices. Real value is the value estimated at base year prices or at constant prices. The monetary aggregate can be converted into real aggregate by applying the following formula;

(3) Indicator of Rate of Inflation:

The wholesale price index is also applied to calculate the rate of inflation in a country. It refers to rate at which prices tend to increase over time.

Note:

The Basic Difference of purpose behind the Consumer Price Index Number and the Wholesale Price Index Number

·        In case of consumer price index number, the basic purpose is to know cost of living of a specified group of consumers in the society.

·        In case of wholesale index number, the basic purpose is to assess the situations of overall demand and supply in the economy. Rising prices indicate a situation of excess demand, while falling prices suggest a situation of deficient demand. Wholesale price index focuses on the rate of inflation in the economy.

 

Producer Price Index

·        As in many countries, in India also, efforts are afoot to shift from WPI (Wholesale Price Index) to Producer Price Index. Producer - Price refers to the basic price including taxes, trade margins and transport cost. Producer Price Index is expected to offer better insights into the analysis of price trends in the country.

 

WPI - Wholesale Price Index | How Inflation is measured | Indian Economy for UPSC

https://www.youtube.com/watch?v=wL4ek96WFO4

 

Who publishes wholesale price index?

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Wholesale Price Index (WPI), COMMODITY GROUP AND WEIGHTAGE OF WHOLESALE PRICE INDEX, USES OF WHOLESALE PRICE INDEX, Who publishes wholesale price index?, Calculating WPI: the Methodology | Index Numbers | 11th Commerce | by @statomics11comm

 

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