Wholesale Price Index (WPI)

WPI entered into a deflationary zone for the first time in more than 4 years.

Published monthly by the Office of Economic Advisor. Updated until May 2020. (Published on June 16, 2020) 
Note: WPI Food Index consists of ‘Food Articles’ from Primary Articles group and ‘Food Product’ from Manufactured Products. Core WPI represents non-food manufacturing.

Recent Data Trend

India's wholesale inflation declined dramatically and turned negative in May, 2020 for the first time in more than 4 years. It stood at -3.2% YoY as against 0.9% YoY in March. This was primarily due to a sharp drop in fuel and manufactured prices.

The inflation in fuel and power segment (weightage of 13.2%) was down by 19.8% YoY in May. This is also the third consecutive month of declining fuel prices and it has been primarily due to a significant reduction in global crude oil prices. The inflation in manufactured products contracted by 0.4% YoY and has been on a downward trajectory since October 2018. This reflects that the weakness in demand was driving low inflation even prior to the crisis.

Another interesting aspect at the wholesale level inflation is an increase in food prices. The WPI food index stood at 2.3% YoY in May. Inflation in manufactured food products and food articles (within primary articles), though lower than before, has stayed in positive range, reflecting only demand for essential items even though the lockdown to contain COVID-19 was gradually relaxed from April. Even excluding the impact of volatile food and fuel prices, core WPI fell by 1.3% YoY in May, declining for the tenth consecutive month.

Does this mean that India is heading into a deflation? Well, that depends on whether the deflation at the wholesale level translates to the retail level. And judging from the past trend, CPI and WPI are noted to have shown divergent trends due to compositional differences. While WPI indicated a disinflationary situation from November 2014 to June 2016, CPI indicated inflation. Also, CPI is dominated by food products, and currently, inflation in consumer food prices remains at an elevated level at 9.3% YoY in May.

In the absence of data for CPI retail inflation for the past two months, WPI data can be used as a proxy to gauge the general price level in India for the time being.

Brief Overview

Wholesale Price Index (WPI) represents the price of representative commodity basket of 697 items at the wholesale level, i.e. goods traded in bulk and between organizations, not the end consumers. It is a measure of inflation at the wholesale level. The significant components of WPI include Manufactured Products, Primary Articles, Fuel, and Power in the decreasing order of weight-age to the stated elements. The purpose of the WPI is to monitor price movements that reflect supply and demand in industry, manufacturing, and construction. The WPI index helps in analyzing both macroeconomic and microeconomic conditions.

The WPI inflation has remained in the negative zone for the entire year of 2015 owing to the weak global prices of oil. The wholesale prices fell by 5.1% in August 2015, the highest fall of all time.

The  Office of the  Economic  Adviser in the  Department of  Industrial  Policy and Promotion,  Ministry of  Commerce  &  Industry is responsible for compiling  WPI and releasing it. Since 1947 the index is being regularly published. The latest series of WPI uses the base year as 2011-12. For more information, please visit the official website.

Wholesale Price Index, Sub-group: Manufacturing

Wholesale Price Index, Sub-group: Primary Articles

Wholesale Price Index, Sub-group: Fuel and Power

Next Release Date:July 15, 2020

Wholesale Price Index-Quarterly

Wholesale Price Index-Annual

Note: Here year represent fiscal year. For example 2010 refers to the period April 2010-March 2011, and so on. 
The entire series 1970-2017 is on the same base year (2011-12=100). The data post-2012 is in the base year 2011-12. For data, before 2012, we have used yearly growth rates obtained from a series of the different base year. For example, the index of 2010 (on 2011-12 base year) has been obtained preserving its growth rate (on 2004-05 base year) and using 2011-12 index value as 100 and dividing it by the growth rate for 2010 obtained earlier.