Question

Which of the following statements is/are correct regarding 'Wholesale Price Index' (WPI) and 'Consumer Price Index (CPI)? i. WPI and CPI are economic indicators used to measure inflation. ii. In WPI, the weight is based on average household expenditure taken from consumer expenditure data. iii. In CPI, the weight of items is based on production values, iv. CPI includes services, whereas WPI does not include services.

• A. Only i & ii
• B. Only i & iii
• C. Only i & iv
• D. Only ii & iv

Answer 1

Answer:

C. Only i & iv

Understanding Wholesale Price Index (WPI) and Consumer Price Index (CPI)

• Both Wholesale Price Index (WPI) and Consumer Price Index (CPI) are crucial economic indicators used primarily to measure inflation, which reflects the rate at which the general level of prices for goods and services is rising.

Wholesale Price Index (WPI)

• Definition: WPI measures the average change in the prices of commodities at the wholesale level, i.e., prices at which goods are sold by manufacturers or wholesalers to retailers or other businesses.

• Publisher: In India, WPI data is published by the Office of the Economic Adviser (OEA), Ministry of Commerce & Industry.

• Coverage: WPI primarily includes goods only (primary articles, fuel & power, and manufactured products) and does not include services.

• Weighting: The weights of various items in WPI are assigned based on their monetary value of transactions in the wholesale market, reflecting their share in the total value of wholesale transactions.

• Base Year: The current base year for WPI is 2011-12.

Consumer Price Index (CPI)

• Definition: CPI measures the average change in prices of a basket of consumer goods and services purchased by households for consumption. It reflects prices at the retail level, paid directly by the end consumer.

• Publisher:

  • CPI (Rural), CPI (Urban), and CPI (Combined): These are published by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI).

  • CPI for Industrial Workers (CPI-IW), Agricultural Labourers (CPI-AL), and Rural Labourers (CPI-RL): These are published by the Labour Bureau, Ministry of Labour & Employment.

• Coverage: CPI includes both goods and services that consumers purchase, such as food, housing, clothing, transport, education, and healthcare.

• Weighting: The weights of items in CPI are based on the average household expenditure patterns, derived from consumer expenditure surveys. This is why statement (ii) from the question, which talks about household expenditure for WPI, is incorrect.

• Base Year: The current base year for CPI (Combined) is 2012.