Price index
A price index is one which shows the changes in price levels compared to a previous month or year. Changes in the price levels are tracked by various price indices in India like Wholesale Price Index (WPI), Consumer Price Index (CPI)… all price indices use a particular year as base year. That means the rise or fall in prices is measured with reference to the price in that base year.
Wholesale Price Index (WPI)
The base year used for WPI is 2004-05. Wholesale prices of all products in the basket with their respective weightages in that year add up to “100”. WPI covers primary goods, power/fuel and manufactured goods. WPI does not include services like transport, health, education etc. The index is vital guide in economic analysis and policy formulation.
Consumer Price Index (CPI)
There are 3 consumer price indices in India. Each track the retail prices of goods and services for specific group of people, because the consumption pattern of different groups differs. While wholesale prices are more or less same across the country, consumer prices or retail prices vary across regions. Food has given a larger weight in CPI while fuel has given more weightage in WPI. Services are covered in CPI. WPI figures come quickly relatively and have an all India character.
