Difference Between Wholesale Price Index and Consumer Price Index

What Is Wholesale Price Index (WPI)?

What Is Consumer Price Index (CPI)?

What Are the Differences Between Wholesale Price Index and Consumer Price Index?

Comparison

WPI

CPI

Measurement

Measures average change in prices received by domestic producers for their output

Measures average change in prices of goods and services consumed by households

Indicator of Inflation

Leading indicator of inflation

Lagging indicator of inflation

Coverage and Sample Size

Covers a smaller sample of goods and services

Covers a broader range of goods and services used by households

Purpose

Mainly used to track inflation in wholesale market

Primarily used for tracking inflation in consumer market

Components

Includes prices of primary articles and fuel

Includes prices of food, housing, clothing, transport, medical care, etc.

Weightage

It gives a higher weightage to primary articles and fuel

It provides a higher weightage to food and housing

Base Year

Base year is usually updated every 5 years

Base year is generally updated every 10 years

Impact on Monetary Policy

Direct impact on monetary policy

Indirect impact on monetary policy

Key Differentiating Factors Between Wholesale Price Index (WPI) and Consumer Price Index (CPI)

FAQs About WPI vs CPI

How does the Reserve Bank of India use WPI and CPI for monetary policy? up-arrow

The Reserve Bank of India (RBI) uses both WPI and CPI to formulate its monetary policy. WPI is an indicator of inflation in the wholesale market, while CPI is an indicator of inflation in the consumer market. The RBI also uses these indicators to determine the interest rate and make other monetary policy decisions.

What is the impact of WPI and CPI on Government policies? up-arrow

WPI and CPI play crucial roles in government policies. The government uses data provided by these indexes for various decision-making purposes, including:

  • Subsidies
  • Social security payments
  • Tax brackets
  • Fiscal policies
  • Allocation of funds
  • Adjustment of budget
  • Other government benefits

Who calculates and publishes WPI and CPI? up-arrow

The Office of Economic Adviser (OEA) under Ministry of Commerce and Industry, Government of India, calculates and publishes WPI. The Central Statistics Office (CSO) under Ministry of Statistics and Programme Implementation, Government of India, estimates and publishes CPI.