Wholesale Price Index (WPI) of India

Lower fuel prices ease Wholesale inflation to an 8-month low of 3.8% in Dec'18.

Published monthly by the Ministry of Commerce and Industry. Updated until December 2018. (Published on January 14, 2019) 
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

The wholesale level inflation as measured by Wholesale Price Index, declined to an 8-month low of 3.8% YoY in Dec'18. WPI based inflation was 4.6% YoY in Nov'18 and 3.6% YoY in Dec'17. WPI inflation is much lower than the market expectation of 4.3% YoY (Bloomberg poll) and is in line with the declining trend in retail inflation. The sharper than anticipated decline is primarily due to softening of fuel and food prices.

The inflation in fuel and power segment (with a weight of 13.2% in WPI) has slowed down to 8.4% YoY in December, nearly half of 16.3% YoY in November. The slump in fuel and power segment is on account of falling petrol and diesel prices in December.

The rate of inflation based on WPI Food Index consisting of 'Food Articles' from Primary Articles group and 'Food Product' from Manufactured Products group has slightly increased to 0.07% YoY in Dec'18, as against deflation of 1.96% YoY in Nov'18. Pulses saw a positive inflation rate of 2.11% in December after staying negative for almost 2-years. The overall vegetable prices had continued to show a deflationary trend since Jul'18.

In addition, the manufactured products (65% of the overall WPI) inflation eased to 3.6% YoY in Dec'18 compared to 4.2% YoY in the previous month. This suggests that not only the food inflation has been coming down but the rate of inflation in other non-food segments are also lowering due to slow down in the economy. This was reflected in sharp decline in IIP in Nov'18 on account of contraction in manufacturing sector.

Given the present scenario, RBI in its next policy meeting in February might consider a rate cut or a change in its stance from "calibrated tightening" to "neutral". Also, if the present trend of disinflation in food prices at wholesale level continues, nominal farm income growth could fall even more. With months ahead of the general election, the government is considering a farm package including farm loan waiver, direct income support to farmers and crop insurance to woo millions of farmers. The farm package, if announced will add to the fiscal slippage.

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: February 14, 2019

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.