WPI vs CPI
Consumer Price Index (CPI) is a price index which represents the average price of a basket of goods over time. CPI calculates the average price paid by the consumer to the shopkeepers.
Education, communication, transportation, recreation, apparel, foods and beverages, housing and medical care are the 8 groups for which the CPI is measured.
It includes these components
Food and Beverage: 45.86%, Housing: 10.07%, Fuel & light: 6.84%, Clothing & Footwear: 6.53%, Pan, tobacco: 2.38%, Miscellaneous:28.32.
Wholesale Price Index (WPI) is an indicator of price changes in the wholesale market. WPI calculates the price paid by the manufacturers and wholesalers in the market. WPI measure the changes in commodity price at selected stages before goods reach to the retail level.
It includes these components
Manufactured products = 64.2%
Primary articles = 22.6%
Fuel and power =13.1%
? Previously in India, WPI is used as a central measure of computing inflation in the economy, but then CPI is adopted as the ideal measure for estimating inflation.
But, when it comes to CPI, it measures inflation at the consumer level, as it traces the price of commodities purchased by an individual in small quantities for the household.
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