How do you calculate Wholesale Price Index?

How do you calculate Wholesale Price Index?

The monthly WPI number shows the average price changes of goods usually expressed in ratios or
percentages.
The index is based on the wholesale prices of a few relevant commodities available.
The commodities are chosen based on their signifi cance in the region. These represent different
strata of the economy and are expected to provide a comprehensive WPI value.
The advanced base year 2011-12 adopted recently uses 697 items.
Problem/limitation
One of the major limitations of WPI is that it does not include services such as the health, IT, Education, transport etc.
Another problem with the WPI is that it does not account for the products of the unorganized sector
in India, which constitutes about 35% of the manufactured output of the Indian economy.
Weightage in WPI
Manufacturing products: 64.97%
Primary and food articles: 20.12%
Fuel and electricity: 14.91
Consumer Price Index
Consumer Price Index or CPI as it is commonly called is an index measuring retail infl ation in the economy by collecting the change in prices of most common goods and services. Called market basket, CPI is calculated for a fi xed list of items including food, housing, apparel, transportation,
electronics, medical care, education, etc. Note that the price data is collected periodically, and thus,
the CPI is used to calculate the infl ation levels in an economy. This can be further used to compute
the cost of living. This also provides insights as to how much a consumer can spend to be on par
with the price change.

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