Distinction between Shopper Value Index (CPI) and Wholesale Value Index (WPI) – Indian Financial system

The WPI and CPI differ in numerous angles since they’re two indices to measure worth modifications. The most important variations embrace:

the character of the commodities chosen,
weights assigned
the sources from which worth quotations are acquired.

*Function*	*CPI*	*WPI*
Revealed	Month-to-month	Month-to-month
Knowledge procured from	Retailers	Wholesalers
Methodology of the index	Geometric imply for elementary merchandise index and Laspeyres Index Method for larger degree index	Weighted arithmetic imply based on Laspeyres Index Method
Value index degree	Inflation at retail degree	Inflation at wholesale degree
Ready by	CSO, MOSPI	Workplace of Financial Affairs, Division for Promotion of Business and Inner Commerce (DPIIT), Ministry of Commerce and Industries
Base yr	2012	2011-12
Variety of Commodities	299	676
Concentrate on sure sorts of commodities	Increased weights to main merchandise (57%) together with meals gadgets. Chosen providers included.	Increased weights to manufacturing Merchandise (Weight 64.23%). No providers merchandise.

Evaluating the WPI (2011-12 base yr) and the CPI (2012 base yr) exhibits that the WPI takes costs on the wholesale worth degree and the CPI takes costs on the retail degree. The WPI provides excessive weightage to manufacturing commodities (round 63%), whereas the CPI provides excessive weightage to meals gadgets and different main merchandise (57%).

Meals gadgets have a weight of 39.1 per cent within the CPI, whereas within the WPI, all meals gadgets have a mixed weight of 24.4 per cent (they’re integrated below Manufactured Meals merchandise). CPI considers providers gadgets additionally, however WPI doesn’t embrace service gadgets.

A notable characteristic of the buyer worth index in India is that the costs are collected on the retail degree. Therefore, CPI inflation is sometimes called retail inflation.

*********