WPI (Wholesale Price Index) Definition

WPI and Inflation

The Wholesale Price Index, or WPI, is an index that measures inflation by tracking the changes in wholesale prices between businesses and manufacturers.

The Wholesale Price Index stands in contrast with the Consumer Price Index. WPI and CPI differ from each other in how CPI measures the change in prices at the retail level, rather than at the production level.

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What Is WPI?

WPI is one of several metrics used to identify periods of inflation or deflation.

It can also be used to estimate the purchasing power of a country’s currency.

WPI is calibrated to “100”as a baseline by using a weighted average cost of goods during a WPI base year which varies by country.

So a WPI of 125 indicates a 25% increase in the level of inflation compared to the baseline years.

Calculating the current rate of inflation will compute the % change in the Wholesale Price Index between two time periods, such as year over year.

For example, the Office of the Economic Adviser in India published a WPI of 114.1 in 2017 and 118.9 in 2018.

(118.9-114.1) divided by 114.1 equals a 4.2% inflation year over year based on the WPI.

How Is WPI Used in the Modern Day?

Today, many countries use a WPI as a measurement of their economies’ health.

However, the U.S. stopped using the WPI in 1978 and instead uses the Producer Price Index, or PPI, which is a more detailed version of the Wholesale Price Index.

Wholesale Price Index FAQs

WPI stands for the Wholesale Price Index.
The Wholesale Price Index, or WPI, is an index that measures inflation by tracking the changes in wholesale prices between businesses and manufacturers.
WPI is one of several metrics used to identify periods of inflation or deflation.
Today, many countries use a WPI as a measurement of their economy's health.
The U.S. stopped using the WPI in 1978 and instead uses the Producer Price Index, or PPI, which is a more detailed version of the Wholesale Price Index.
True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True contributes to his own finance dictionary, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, his interview on CBS, or check out his speaker profile on the CFA Institute website.