How do you Calculate the Wholesale Price Index?

By K Balaji|Updated : November 1st, 2022

Use the formula (Current Price / Base Period Price)× 100 to calculate the wholesale price index or WPI. Only developing countries, such as India, use the wholesale price index. Enterprises can compare and contrast their performance with that of other products and take appropriate steps to improve and expand on it.

Steps to Calculate Wholesale Price Index

A wholesale price index (WPI) is in charge of measuring the overall variations in producer prices over time. Simply put, it aids in measuring inflation based on the prices of services and goods before they reach consumers. It is calculated by using the formula (Current Price / Base Period Price) × 100.

According to data provided by the Ministry of Commerce & Industry, the WPI of India inflation in May 2022 is more than 15.88% in comparison to may. In April month, it had spiked to around 15.38.

Advantages of the Wholesale Price Index

The WPI is calculated on the basis of goods and is a measure of the rate of price increase, also known as inflation. The Wholesale Price Index represents an economy's overall growth, assists businesses in budgeting, and assists the government in developing policies to improve underperforming sectors.

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FAQs on Calculation of Wholesale Price Index

  • To calculate the wholesale price index, consider a simple example. Suppose, the total expense of goods in the current year (2022) is INR 3,500. Take 2020 as the Base Year. The total price of goods in the base year is INR 2,000. WPI will be 175.

  • The Wholesale Price Index or WPI depicts the cost of goods at a wholesale rate. WPI is used as a measurement of inflation or the rate at which prices rise in some economies.

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