WPI

Wholesale Price Index captures price movements at the stage of primary and secondary production — before goods reach the consumer. Published monthly by the Office of the Economic Adviser under the Ministry of Commerce and Industry, WPI in India uses a base year of 2011–12 and covers three broad groups: primary articles (22.6% weight, including food, non-food, and minerals), fuel and power (13.2%), and manufactured products (64.2%). The large weight of manufactured goods means that global commodity prices and domestic industrial output gaps have a significant bearing on the index.

Historically, WPI was India's headline inflation measure and was used as a deflator for GDP components and for statutory purposes such as dearness allowance calculations. However, its relevance as a policy anchor diminished after the RBI adopted CPI as its target under the FIT framework in 2016. WPI's key limitation as a consumer welfare measure is that it excludes services — which constitute over half of India's GDP — and captures prices at the wholesale stage, which may not reflect what households ultimately pay after margins, taxes, and transport costs are added.

WPI and CPI often diverge sharply. When global crude oil or metal prices spike, WPI rises quickly due to its high weight on manufactured and fuel products, even if consumer prices are insulated by government subsidies or fuel taxes. Conversely, vegetable price spikes — highly visible in CPI given its large food weight — may register more modestly in WPI, which tracks wholesale vegetable prices that can differ from retail prices due to mandi inefficiencies and retail mark-ups. During 2021–22, WPI inflation ran in double digits for most of the year, driven by imported commodity inflation, while CPI remained somewhat more contained due to base effects and subsidies.

For industry and corporate analysts, WPI is a useful proxy for input cost pressure. A rising WPI — particularly in manufactured goods — signals that companies face higher raw material costs, which could compress margins if they cannot pass costs through to consumers. The divergence between WPI (input costs) and CPI (output prices) can indicate margin pressure building across the manufacturing supply chain. Cement, steel, chemicals, and FMCG companies are sectors where analysts routinely compare WPI trends against their own input baskets.

WPI data also feeds into the Producer Price Index (PPI) framework that India has been developing, with the intent to eventually publish a formal PPI that more accurately represents producers' received prices across all sectors including services. Until that transition occurs, WPI remains the standard reference for wholesale price trends and is a useful complement to CPI in building a complete picture of India's inflationary environment.