Inflation index-(WPI)

                                                                            Inflation Index


In the last article we saw the types of inflation. In this article, we will see the inflation index.
There are two types of inflation index in the Indian economy.

1) Wholesale price index

2) Retail price index       


Wholesale price index

Measures the wholesale price index by calculating the price of various commodities at the wholesale level in the economy. The Wholesale Price Index is published by the Consultative Department of the Ministry of Commerce and Industry of India.

In India, the wholesale price index was first calculated in 1942, in which prices  of 23 items and 23 price samples were considered. After this, the wholesale price index was published regularly since 1947

Base year:

Price Indexes are considered as a special base year's . Based on the recommendation of the Abhijit Sen Gupta Committee from 2010. 2004-2005 it was considered as the base year, but it has recently been changed. Currently, the base year is not 2004-2005 , 2011-2012 is the new base year.The Wholesale Price Index (WPI) series in India has undergone six revisions in 1952-53, 1961-62, 1970-71, 1981-82, 1993-94 and 2004-05 so far. The current series is the seventh revision. The revision entails shifting the base year to 2011-12 from 2004-05, changing the basket of commodities and assigning new weights to the commodities. It has generally been the practice to undertake the revisions on the advice of a Working Group constituted

each time. For the new series with base 2011-12=100, a Working Group was constituted on 19th March 2012 chaired by Late Dr. Saumitra Chaudhuri, Member, erstwhile Planning Commission and comprised most stakeholders. 





WPI INDEX Changes from 2004-05 to 2011-12
Major Group
Weights
No. of Items
No. of
Quotations
2004-05
2011-12
2004-05
2011-12
2004-05
2011-12
ALL COMMODITIES
100.00
100.00
676
697
5482
8331
PRIMARY ARTICLES
20.12
22.62
102
117
579
983
FUEL & POWER
14.91
13.15
19
16
72
442
MANUFACTURED
64.97
64.23
555
564
4831
6906
PRODUCTS



The index basket of the new series has a total of 697 items including 117 items for Primary Articles, 16 items for Fuel & Power and 564 items for Manufactured Products.
Consumer Price Index:
  CPI is calculated by measuring the prices of various commodities at the customer level. Different CPI numbers are counted for different types of community groups. You will find out about this in the next article.





























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