Difference between WPI & CPI

In financial planning, it is crucial to factor in inflation to ensure the achievement of one’s goals. This is because if you don’t take inflation into account while calculating goal values, you could run short of the corpus.

Inflation basically tells you how the prices of goods and services have increased over time, resulting in the erosion of your spending power or fall in the purchasing power of money.

The two main metrics that are used to measure inflation in India are the wholesale price index and consumer price index, which record the price changes every month. Here’s how they differ.


What is WPI?
Wholesale price index measures the average change in prices of commodities that are traded in bulk in the wholesale market before these reach the retail consumers. It is an indicator of inflation, which helps formulate trade, fiscal and economic policy changes. It consists of a weighted basket of commodities including primary articles (food and non-food articles, minerals, crude petroleum & natural gas); fuel & power (coal, mineral oil, electricity); and manufactured products (food and beverages, textiles, apparel, pharmaceuticals, chemicals, metal, rubber, computer, machinery, vehicles, machinery, furniture, etc.).

What is CPI?
Consumer price index, on the other hand, measures the rise or fall in the prices of goods and services that are used by consumers or households over a period of time. It is used as an important tool by the government and central bank to maintain price stability. It is also a weighted index comprising a basket of household items, including food & beverages, apparel, housing, recreation, education, medical care, transport, communication, etc.

WPI vs CPI