Difference between Consumer Price Index (CPI) and Wholesale Price Index (WPI) – UPSC Notes

ParameterWholesale Price Index (WPI)Consumer Price Index (CPI)
DefinitionWPI measures the changes in the price of goods before they are sold at retail. It represents the price of a basket of wholesale goods, i.e., goods sold in bulk and traded by wholesale businesses to other businesses.CPI measures the changes over time in the price level of a basket of consumer goods and services bought by households. It captures changes in price level at the consumer level.
Published byOffice of the Economic Adviser (OEA) in the Department for Promotion of Industry and Internal Trade under the Ministry of Commerce and IndustryNational Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI)
MeasuresCalculates the total change in wholesale prices of commoditiesCalculates the special change in retail prices of goods and services
ScopeCovers only goodsCovers goods and services
CommoditiesFuel and Power, Food Articles, Non-Food Articles, Minerals, Crude Petroleum & Natural gas, Chemical and related products, Metal products, Raw metals, Alloys, Machinery, and other manufacturing inputs, etc.Food and beverages, housing and clothing, bedding and footwear, fuel and light, etc.
ServicesServices are not included in WPIServices are included in the CPI like education, housing, medical care, etc.
Area of FocusFocuses on wholesale goods, i.e., goods sold in bulk and traded between businesses (or wholesalers)Focuses on goods and services that households purchased (or acquired) for the purpose of consumption
Stage involvedMeasures the initial or the first stage of a transactionMeasures the final or last stage of a transaction
Price paid byWholesale dealers and manufacturersConsumers
Reference Year for CalculationUses financial year as a referenceUses calendar year as a reference
Base YearThe base year for WPI is 2011-12.The base year for CPI is 2012.
UsageWPI provides estimates of inflation at the wholesale transaction level for the economy overall. It helps in timely intervention by the government to monitor inflation before the price hike spills over to retail prices. WPI-based inflation estimates are used by the Government in the formation of trade, fiscal and other economic policies. WPI is also utilized for the purpose of escalation clauses in the supply of raw materials, machinery, and construction work.CPI is a primary tool used by the Reserve Bank of India (RBI) to estimate inflation targets. RBI adopted the CPI as its key measure of inflation in April 2014. A CPI can be used to adjust for the effect of inflation, index the real value of wages, salaries, and pensions; to regulate prices; and to deflate monetary magnitudes to show changes in real values.

Also Read:

Leave a Comment