In the economics world, the wholesale price index and consumer price index are the two very commonly used measures that help us in determining inflation in a country. The former helps in calculating the average price changes for items offered for wholesale while the latter helps in computing the general price level of goods or services that a consumer must pay for. In order to understand the complete difference between the wholesale price index(WPI) and consumer price index(CPI), we have included the following main topics in this article.
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Definition Of Wholesale Price Index(WPI)
WPI stands for wholesale price index, and are the price index numbers that help to calculate or determine the average changes in the wholesale prices of products/goods in a country. WPI also determines the changes in goods prices at a certain level i.e usually at the initial stages of the transaction, before they reach the final stage(the consumer).
Also, WPI is generally reported on a monthly basis to show the average changes in the price of goods. The Economic Advisor in the Ministry of Commerce and Industry is generally responsible for publishing WPI. WPI is restricted to goods that are mainly traded on a wholesale basis like fuel, minerals, manufacturing products, agriculture products, etc. Only emerging countries with strong production industries utilize WPI.
Definition Of Consumer Price Index(CPI)
CPI stands for consumer price index, and it computes the average increase in the price of goods and services in retail or the price of goods and services consumed directly by the general public so that they can maintain the same standard of living in the ongoing year as in the base. CPI act as an indicator that helps the government to know the cost fluctuations, thereby helping them in making excellent economic decisions.
The Central Statistic Office in the Ministry of Statistics and Programme Implementation is the responsible department for publishing CPI. Unlike WPI, it is for both goods and services i.e, transport, food, communication, recreation, housing, education, and medical care.
Wholesale Price Index Vs Consumer Price Index(Comparison Table)
|Basis For Difference||Wholesale Price Index||Consumer Price Index|
|Definition||It computes the average change in the price of commodities at the wholesale level.||It refers to the price index that measures the average price changes of goods and services that a consumer has to pay for consuming a basket of goods.|
|Published By||Office of Economic Advisor||Central Statistics Office|
|Measurement Of Inflation||It measures inflation at the initial stage||It measures inflation in the final stage|
|Scope||It covers goods only||It covers both goods and services|
|Focuses On||It focuses on the price of goods traded between wholesalers or businesses||CPI focuses on the price of goods and services that are being purchased by consumers.|
|Used||WPI is used by a few countries i.e used by emerging countries.||CPI is used by 157 countries|
Key Differences Between Wholesale Price Index And Consumer Price Index
The key differences between the wholesale price index vs consumer price index are as follows.
- WPI stands for wholesale price index, and are the price index numbers that can be used to calculate or determine the average changes in the wholesale prices of products/goods in a country. On the other hand, CPI stands for consumer price index, and it refers to the price index that measures the average price changes of goods and services that a consumer has to pay for consuming a basket of goods.
- The wholesale price index is the first stage and the consumer price index is the final level at which prices of goods begin to fluctuate.
- The wholesale price index covers the prices of goods only. On the other hand, CPI covers both goods and services like transport, food, communication, recreation, housing, education, and medical care.
- Only a few emerging countries use WPI while CPI is a broad concept and more than 150 countries use it.
- Wholesale price deals with the prices of goods traded between two business parties for the purpose of resale. On the other hand, CPI stresses on prices of goods purchased directly by the consumers for the purpose of consumption.
So, with the above discussion, we can simply conclude that both WPI and CPI play a significant role in calculating the rate of inflation. While CPI is the mechanism that estimates the changes in the general price level, from the consumer’s point of view, the WPI determines the changes in the price of wholesale commodities. Only a few emerging countries use WPI while CPI is a broad concept and more than 150 countries use it.