Calculation
The wholesale price index (WPI) is based on the wholesale price of a few relevant commodities of over 240 commodities available. The commodities chosen for the calculation are based on their importance in the region and the point of time the WPI is employed. For example in India about 435 items were used for calculating the WPI in base year 1993-94 while the advanced base year 2004-05 uses 676 items. The indicator tracks the price movement of each commodity individually. Based on this individual movement, the WPI is determined through the averaging principle. The following methods are used to compute the WPI:
- Laspeyres Formula
- It is the weighted arithmetic mean based on the fixed value-based weights for the base period.
Ten-Day Price Index
Under this method, “sample prices” with high intra-month fluctuations are selected and surveyed every ten days through phone. Utilizing the data retrieved by this procedure and with the assumption that other non-surveyed “sample prices” remain unchanged, a “ten-day price index” is compiled and released.
Calculation Method
Monthly price indexes are compiled by calculating the simple arithmetic mean of three ten- day “sample prices” in the month.
Read more about this topic: Wholesale Price Index
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