Wholesale Price Index

Also called: WPI · Topic: Inflation and Index Numbers: CPI, WPI, IIP and the Deflator · NCERT: Class 11, Ch 7 "Index Numbers"; Class 12, Ch 2 "National Income Accounting"

Meaning

The Wholesale Price Index (WPI) measures how the prices of goods traded in bulk change over time. "In bulk" means large lots sold between businesses, such as raw materials and semi-finished goods. WPI covers goods only and has no reference consumer group.

• Why it matters: WPI shows cost pressure on producers early, before it reaches shop prices.
• Where it is used: many contracts have price escalation clauses tied to WPI. These clauses raise the contract price automatically when WPI rises.
• Formula (WPI inflation, year-on-year): WPI inflation (%) = (WPIₜ − WPIₜ₋₁₂) ÷ WPIₜ₋₁₂ × 100, where t is the current month.

Explanation

What WPI covers and who compiles it

• Goods traded in bulk between businesses. It does not track single items sold in a shop.
• Raw materials: cotton, iron ore.

• Semi-finished goods: yarn, steel billets.

• Services are left out. Barber charges, repairs, rent, school fees and hospital charges are not in WPI.

• General price level. WPI is not built for a group of people. CPI is different: it is built for a group such as industrial workers or all households.
• Compiler: the Office of the Economic Adviser (OEA) in the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry.
• Frequency: WPI is published monthly. The old weekly series has ended.

How to read a WPI number

• An index number compares today's price level with the base year, which is set at 100.
• % change since base = (Index value − 100) ÷ 100 × 100
• NCERT example: WPI (base 2004-05) = 253 in October 2014. (253 − 100)/100 × 100 = 153%. The general price level rose 153% over that period.

• NCERT example: WPI (base 2011-12) = 112.8 in May 2017. Wholesale prices rose 12.8% between 2011-12 and May 2017.

• WPI inflation compares this month's index with the same month last year.

• Example: WPI = 150 in June 2025 and 156 in June 2026. Inflation = (156 − 150)/150 × 100 = 4%.
• NCERT's old weekly formula used the same logic with weeks: (Xₜ − Xₜ₋₅₂)/Xₜ₋₅₂ × 100. It is no longer used because the weekly series has ended.

Components and weights (2011-12 series, NCERT)

Group	Weight
Primary articles (food articles, non-food articles, minerals; crude and gas in this series)	22.62
Fuel and power	13.15
Manufactured products	64.23
All commodities	100.00

• Manufactured products carry almost two-thirds of the weight. So WPI moves mainly with factory goods such as metals, chemicals and textiles.
• WPI Food Index = food articles (from primary articles) + food products (from manufactured products).

• Its weight is 24.23, about a quarter of WPI (2011-12 series).

• Worked example (approximate, using group weights): in one year, primary articles rise 5%, fuel and power rise 10%, and manufactured products rise 2%.

• WPI inflation ≈ (22.62×5 + 13.15×10 + 64.23×2)/100 = (113.1 + 131.5 + 128.5)/100 ≈ 3.7%
• Fuel has only about 13% of the weight, yet it produces more than one-third of this inflation.

What makes WPI rise or fall

• Global commodity prices: crude oil, metals and other raw materials.
• Oil price up → fuel and power group rises sharply → WPI jumps.

• Commodity prices fall → WPI can turn negative, even when shop prices keep rising.

• Factory goods prices: the manufactured products group has the largest weight, so it has the biggest pull.

• Food supply: food articles and food products together make up about a quarter of WPI.
• Monsoon matters less for WPI than for CPI, because food has a smaller weight in WPI.

In India

• Compiler: OEA, DPIIT (Ministry of Commerce and Industry). WPI is not compiled by MoSPI.
• New base year 2022-23: the government approved the change from 2011-12 to 2022-23, along with new Producer Price Indices (PPIs), on 25 May 2026. OEA-DPIIT released the new series on 15 June 2026, and it replaces the 2011-12 series [2][3].
• Main changes in the 2022-23 series [3]:
• The basket grew from 697 to 957 items.
• Weights are now based on Gross Value of Output (GVO), the total value a sector produces. The 2011-12 series used Net Traded Value. GVO shows more accurately how important each good is in the economy.
• Crude petroleum and natural gas moved from 'Primary Articles' to 'Fuel and Power'.

• Solar and wind power were added under 'Electricity', and nuclear electricity entered the basket.

• Latest group data (new series, May 2026), year-on-year inflation: primary articles 4.99%, fuel and power 30.33%, manufactured products 7.48% [3].

• The very high fuel figure shows how sensitive WPI is to energy prices.

• The 2022-23 group weights are not given in these notes. Use the NCERT 2011-12 weights for concept questions.

• WPI will be phased out: because many contracts use WPI escalation clauses, WPI will be published alongside the PPI for five years and then discontinued. This gives users time to move to the PPI [2].

• WPI lost its policy role:
• Urjit Patel Committee (2014) recommended that the RBI treat CPI (combined) as the key measure of inflation [5].

• India adopted flexible inflation targeting (FIT) in June 2016. The target, notified on 5 August 2016, is 4% CPI inflation, with an upper limit of 6% and a lower limit of 2% [6].

• Episodes when WPI and CPI moved apart:

• 2022 commodity and oil shock: WPI inflation was 12.41% in August 2022 and 10.7% in September 2022 [4]. CPI stayed around 7%.
• 2015–16 and mid-2023: WPI was negative while CPI stayed positive. Global commodity prices fell, but food and services kept rising.

Don't confuse with

• Consumer Price Index (CPI-C): CPI measures retail prices and includes services. Its heaviest part is food. It is compiled by NSO, MoSPI, and its latest base is 2024 = 100 [7]. WPI measures wholesale prices of goods only, and it is compiled by OEA-DPIIT.
• Producer Price Index (PPI): PPI measures the prices producers receive, excluding taxes, trade margins and transport costs. It can also cover services. WPI prices can include taxes and margins, so the same cost may be counted more than once along the supply chain.
• GDP deflator: the deflator covers all goods and services produced in the country, and it has no fixed basket. WPI uses a fixed basket of traded goods only.
• Index of Industrial Production (IIP): IIP tracks the volume of production, not prices. WPI tracks prices.

Prelims Hooks

• WPI is compiled by the Office of the Economic Adviser, DPIIT (Ministry of Commerce and Industry), not MoSPI. It covers goods only, with no services and no reference consumer group.
• New WPI base: 2022-23, released 15 June 2026. Items rose from 697 to 957. Weights now use Gross Value of Output in place of Net Traded Value. Crude and natural gas moved to Fuel and Power [2][3].
• WPI will run alongside the PPI for 5 years and then be discontinued [2]. The Services PPI covers seven services: banking, securities, insurance, pension fund management, railways, air passenger transport and telecom [3].
• 2011-12 weights: manufactured products 64.23 > primary articles 22.62 > fuel and power 13.15. The WPI Food Index weight is 24.23.
• Trap: NCERT calls WPI inflation "headline inflation" and WPI non-food manufactured products "core inflation". Today, headline = CPI-C inflation and core = CPI excluding food and fuel.
• WPI inflation (%) = (WPIₜ − WPIₜ₋₁₂) ÷ WPIₜ₋₁₂ × 100. The weekly WPI series has ended; WPI is now monthly.

Mains Points

• Why WPI lost its role as the policy measure: households, wage bargaining and inflation expectations follow retail prices, not wholesale prices.
• So the Urjit Patel Committee (2014) made CPI the key measure, and CPI became the FIT target (4% ± 2%) [5][6].

• WPI still gives an early warning of cost pressure. For example, WPI inflation was 12.41% in August 2022 [4].

• WPI to PPI shift (2026), a statistical reform:

• The PPI removes double counting of taxes and margins.
• It adds services, and it follows international practice [3].
• The five-year overlap protects escalation clauses in infrastructure and supply contracts [2].

• Reading Output PPI and Input PPI together shows whether producers' margins are being squeezed.

• The WPI–CPI gap as a diagnostic tool:

• WPI above CPI: firms face rising input costs (wholesale price → factory cost → shop price). These costs may pass through to retail prices after a lag.
• WPI below CPI, as in 2015–16 and 2023: food and services are driving inflation, and manufacturers have weak pricing power. The right response is supply-side action, not only repo rate changes. (The repo rate is the rate at which the RBI lends short-term money to banks.)

Related concepts

• WPI major groups
• WPI Food Index
• Producer Price Index
• Headline inflation
• Core inflation

Read more

• WPI, PPI, and headline vs core inflation