The difference in WPI and CPI, measurement of inflation

cpi wpi

Wholesale Price Index(WPI) was main index for measuring of inflation in India till 2014. RBI adopted new CPI(Combined) as the key measure of inflation.

Differences in CPI and WPI

Some more differences in WPI and CPI

1. Primary use of WPI is to have inflationary trend in economy as a whole. However CPI is used for adjusting income and expenditure streams for changes in cost of living.

2. WPI is based on Wholesale prices for Primary articles, factory prices for manufactured products and administered prices for fuel items. On the other hand CPI is based on retail prices which includes all distribution costs and taxes.

3. CPI covers only  consumer goods and services while WPI covers all goods including intermediate goods transacted in the economy.

4. WPI weights primarly based on national accounts and enterprises survey data. While CPI weights are derived from consumer expenditure  survey data.

5. Prices of WPI collected on voluntary basis while prices data for CPI are collected by investigators by visiting markets.