Difference Between Wholesale Price Index and Consumer Price Index (With Table)

Inflation is the change in the prices of goods and commodities at a specified level. Inflation is measured by two units: Wholesale Price Index and Consumer Price Index. The Wholesale Price Index, is a price indicator that is used to determine price changes in the market for items offered for wholesale. Another price index that focuses on the amount of money that a customer must pay is the Consumer Price Index.

Wholesale Price Index vs Consumer Price Index

The difference between the Wholesale Price Index and Consumer Price Index is that the Wholesale Price Index (WPI) determines the fluctuations in prices paid by wholesalers in the wholesale market, whereas the Consumer Price Index is the measure of the price paid by consumers.

The Wholesale Pricing Index (WPI) is a gauge of wholesale price fluctuations. It tracks the market price paid by manufacturers and distributors. It is a price index that helps us know the prices of goods at several levels before reaching the sale level. WPI is the very first level where price changes are determined.

The Consumer Price Index (CPI) is a valuation method that reflects the overall cost of goods under a certain time period. It estimates the average price paid by customers to merchants. It is considered a better method as it is used to determine the price paid by a customer for a particular basket of goods.

Comparison Table Between Wholesale Price Index and Consumer Price Index

Parameters of ComparisonWholesale Price IndexConsumer Price Index
DefinitionWholesale Price Index is the metric that helps us determine price changes at the wholesale level.The consumer price index helps estimate price fluctuations in a basket of products paid by a customer.
Published byIt is issued by the Ministry of Commerce and Industry’s Office of Economic Advisor.The Central Statistics Office of the Ministry of Statistics and Programme Implementation publishes the Consumer price index.
Measurement of InflationInflation is measured at the first stage by the Whole Price Index. Inflation is measured at the final stage by the Consumer Price Index
Covered Goods and ServicesFood articles, non-food articles, and minerals are the main articles used to calculate Wholesale Price Index.Food, energy services, electricity, vehicles are the main articles used to calculate the inflation in Consumer Price Index.
Used by CountriesOnly a few nations, primarily emerging countries with strong manufacturing industries utilize the Wholesale Price Index.Consumer Price Index has been widely utilized by over a hundred countries.

What is Wholesale Price Index (WPI)?

WPI stands for Wholesale Price Index, and it is used to calculate the average change in price when a wholesaler sells items in large quantities. Before reaching the final level, WPI estimates the price at a certain level. Usually, WPI is determined at the initial level.

WPI is published monthly to show average price changes in products. The total cost of commodities this year is compared to that of the previous year. Prices from a previous year are compared to the total and the difference is reported as a percentage. The base year taken in WPI is 2011-2012.

WPI is issued by the Ministry of Commerce and Industry’s Office of Economic Advisor. It is used only for the goods alone. The total goods covered in WPI are around 696 items. It tracks the market price paid by manufacturers and distributors. It is a price index that helps us know the prices of goods at several levels before reaching the sale level. WPI is the very first level where price changes are determined.

Only a few nations, primarily emerging countries with strong manufacturing industries utilize the Wholesale Price Index.

What is Consumer Price Index (CPI )?

The CPI is a consumer price index that monitors the change in the price of a particular basket of goods that a consumer pays for. The consumer price index is the change in prices of goods in the final stage. For a particular year, the Consumer Price Index (CPI) formula is:

The Consumer Price Index (CPI) is a suitable indicator to know where your economy lies. It is the most commonly used indicator of inflation and, by extension, of the government’s economic policy success. CPI lets the government know about the price fluctuations each consumer brings out, helping them in making big economic decisions.

The Central Statistics Office of the Ministry of Statistics and Programme Implementation publishes the CPI. Unlike WPI, it includes both goods and services. It is published once a month. The goods covered in CPI are divided into two parts: the urban basket of goods and the rural basket of goods.

The calendar year is used as the CPI’s base year. It plays an important role in maintaining a country’s economy as it is an essential factor to determine inflation.

Main Differences between Wholesale Price Index and Consumer Price Index

  1. The Wholesale Price Index and Consumer Price Index is that the WPI measures the change in prices of goods at wholesale level whereas CPI measures the change in prices of goods at consumer level.
  2. WPI is the initial level and the CPI is the final level at which goods prices begin to fluctuate.
  3. WPI concentrates on items that are exclusively exchanged among wholesalers or companies whereas CPI concentrates on items that are purchased by customers.
  4. Only a few nations use the WPI, whereas CPI is popular concept to be used by multipls countries.
  5. WPI is issued by the Ministry of Commerce and Industry’s Office of Economic Advisor whereas the Central Statistics Office of the Ministry of Statistics and Programme Implementation publishes the CPI.

Conclusion                                                                                

The WPI and the CPI are both used to compute the rate of inflation. WPI is used to estimate the changes in the price of goods paid by wholesalers or companies when buying goods in large quantities. CPI is used to determine the price changes in a basket of goods paid by the consumer.

WPI was earlier the only unit that was used, but the government was unable to determine its impact on the general public because most individuals transact wholesale transactions, and thus CPI was added. WPI measures inflation at the corporate level, whereas CPI measures inflation at the individual consumer level.

Price stability is the primary goal of monetary policy, which can be achieved through limiting inflation, which may be tracked and quantified using the Wholesale Price Index and Consumer Price Index.

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