# The Wholesale Price Index (WPI)
**The Wholesale Price Index (WPI)** is a **key economic indicator** used to track changes in the prices of goods traded in bulk. It serves as a measure of **inflation at the wholesale level**, reflecting fluctuations in the prices of goods at various stages of **production and distribution**.
The WPI is constructed using a **weighted average** of price changes for a **basket of goods**, with weights assigned based on their relative importance in the economy. By monitoring changes in the WPI over time, **economists, policymakers, and businesses** can gauge **inflationary pressures** and assess the overall health of the economy.
The WPI is often standardized with a **base year** that is typically set to **100**. This **"2010 = 100"** notation serves as a reference point against which price changes in subsequent years are measured. For example, if the index for a particular year is **120**, it indicates that prices have increased by **20%** relative to the base year. Conversely, an index value of **90** would indicate a **10% decrease** in prices compared to the base year. This standardized approach allows meaningful comparisons of price movements over time and facilitates analysis of **inflationary trends** in different sectors of the economy.
Overall, the WPI plays an important role in guiding **monetary policy decisions**, **forecasting economic performance**, and informing **business strategies**.
# The figure shows the WPI in India 2001 - 2021.