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Wholesale Price Index (WPI)

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Definition of 'Wholesale Price Index (WPI)'

A Wholesale Price Index (WPI) is the price of a representative basket of wholesale goods. Some countries use WPI changes as a baseline measure of inflation. However, most countries now report a Producer Price Index (PPI) instead.

Calculation of Wholesale Price Index

The WPI consists of over 2,400 commodities. The indicator tracks the price movement of each commodity individually. Based on this individual movement, the index is determined through an average calculation.

Below are the various methods used to calculated the WPI:

Laspeyres Formula (also know as the relative method): This is the weighted arithmetic mean based on the fixed value-based weights for the base period.

Ten-Day Price Index: This calculation takes "sample prices" with high intra-month fluctuations and selects them to be surveyed every ten days through phone. Using the data retrieved by this procedure and with the assumption that other non-surveyed "sample prices" remain unchanged, a "ten-day price index" is compiled and released.

Calculation Method: Monthly price indexes are compiled by calculating the simple arithmetic mean of three ten-day “sample prices” in the month.

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