The Wholesale Price Index (WPI) is a statistical concept and India's primary indicator of wholesale inflation, measuring the average change in prices of a fixed basket of goods at the wholesale or producer level. The WPI was historically introduced to monitor price movements in the economy, with the first "quick" series computed from January 10, 1942, by Sir Theodore E.G. Gregory, the first Economic Adviser, using the week ended August 19, 1939, as the base.
The index is compiled and released monthly by the Office of the Economic Adviser (OEA) under the Ministry of Commerce and Industry. It works by tracking 697 commodities based on the current base year of 2011-12, using the Laspeyres formula. The commodities are grouped into three categories: Manufactured Products (weight 64.23%), Primary Articles (weight 22.62%), and Fuel and Power (weight 13.15%). WPI measures prices at the first point of bulk sale, excluding retail margins and taxes, providing a view of production-level price changes.
The WPI is closely connected to the Consumer Price Index (CPI); while WPI tracks producer-level inflation, the CPI measures retail-level inflation. The Reserve Bank of India (RBI) now uses the CPI for its formal inflation-targeting framework, but the WPI is still used by the government for trade and fiscal policy formulation and as a deflator for macroeconomic variables like GDP. The WPI series was recently amended in 2017 when the base year was revised from 2004-05 to 2011-12, and the number of items in the basket was increased to 697.