A wholesale price index (WPI) measures change in the overall price of goods before they are sold at retail. This includes the prices charged by manufacturers and, often outside the U.S., wholesalers. Usually expressed in terms of the percentage change from the prior month or a year earlier, the WPI is an inflation indicator.
What is India’s position in the WPI in recent times?
India’s annual rate of inflation, based on monthly wholesale price index (WPI), declined further to 4.95 per cent (provisional) in December 2022, over December 2021, according to the ministry of commerce & industry. India’s WPI inflation had gone up to a record 15.88 per cent in May 2022, compared to single digit figure of 7.39 per cent in March 2021.
The WPI inflation was 8.39 per cent in October 2022, and 5.85 per cent in November 2022. Decline in the rate of inflation in December 2022 is primarily contributed by fall in prices of food articles, mineral oils, crude petroleum & natural gas, food products, textiles and chemicals & chemical products as reported by the Office of the Economic Adviser, Department for Promotion of Industry, and Internal Trade (DPIIT), under the ministry of commerce and industry.
The index for manufactured products (weight 64.23 per cent) for December 2022 decreased to 141.1 from 141.5 for the month of November 2022. The index for ‘Manufacture of Textiles’ sub-group too decreased to 138.4 from previous month’s 140.3. However, the index for ‘Manufacture of Wearing Apparel’ increased to 149.9 from previous month’s 149.4.
The Wholesale Price Index of textiles across India during financial year 2023 was nearly 143. The price index value of textiles increased by about 35 percent from the base year of 2012. An overall increase in the price index was seen over the years from financial year 2013 in the country. The Wholesale Price Index of knitted cotton fabric across India during financial year 2023 was over 129. The price index of cotton fabric increased by about 24 percent from the base financial year of 2012. An overall increase in the price index of cotton fabric was noted over the years from financial year 2013 in the country.
How is the wholesale price index calculated?
Wholesale price indexes are reported monthly to track the overall rate of change in producer and wholesale prices. The index is set at 100 for its base period and calculated based on subsequent price changes for the aggregate output of goods.
A WPI typically considers commodity prices, but the products included vary from country to country. They are also subject to change, as needed, to better reflect the current economy. Some small countries only compare the prices of 100 to 200 products, while larger ones tend to include thousands of products in their WPIs.
It is important to measure the Wholesale Price Index for commodities that are in demand. From textiles to commodities that have a daily requirement in the lifeline of existence needs to be measured and looked closely. The price changes of these commodities are crucial to be studied as it helps with understanding the dynamics of the economy.
