Tracking Two Decades: India's Wholesale Price Index Journey

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