WPI vs CPI
|
Elements |
Wholesale Price Index (WPI) |
Consumer Price Index (CPI) |
| Definition | Wholesale Price Index is a measure of the average change in the price of goods at a wholesale level or in the wholesale market. | Consumer Price Index calculates price changes of goods and services that a consumer has to pay for consuming a basket of goods. |
| Published by | Office of Economic Advisor | National Statistics Office |
| Stage involved | It measures the initial or first stage of a transaction | It is the final or last stage of a transaction |
| Area of Focus | It focuses on goods that are traded only between wholesalers or businesses | It focuses on goods that are being purchased by consumers |
| Base Year | 2011 – 12 | 2011- 12 |
Index of Industrial Production (IIP)
- Measures the growth rates in different industry groups of the economy.
- The index of 8 core industries are: Refinery Products > Electricity > Steel > Coal > Crude Oil > Natural Gas > Cement> Fertilizers.
- These 8 industries command 40.27% weight in the overall IIP. weight in the overall IIP.
- Base Year: 2011-12
- The IIP index is computed and published by the Central Statistical Organization (CSO) on a monthly basis.
Producer Price Index (PPI)
- PPI measures the average change in prices received by the producer and excludes indirect taxes.
- PPI is measured monthly and is released in a report by the Bureau of Labour Statistics.
Base Effect
- The base effect refers to the impact of the rise in price level (i.e. last year’s inflation) in the previous year over the corresponding rise in price levels in the current year (i.e., current inflation).
Effects of Inflation
|
Positives |
Negatives |
| It lowers the interest rate | Lenders suffer as real purchasing power declines |
| Debtors benefit. | Fixed income people like pensioners and salaried people suffer. Uncertainty in the economy so less investment |
| Currency depreciates | Imports suffer as they become costlier due to depreciation of the currency |
| Exports benefit majorly due to the depreciation of the currency | Real wages decrease. |
| Businesspeople gain profits. | Rupee purchasing power declines. |
| Savings, investment, and employment rise in the short term | Fall in real value of savings. |
| Nominal wage increases. | Decline in competitiveness. |