Submitted by:

Priyanka Sharma
Mehak Sharma
Sahil Goyal
Raman Preet Singh
Sakhi saiyan toh khub hi kamat hai
Mhangai dayan khai jath hai
 Inflation

• Inflation is the rate at which prices of

goods and services increase in an
economy.
• 7-8 percent inflation is considered
alarming.
• 2-3 percent inflation is low and favorable
Wholesale Price Index (WPI)

WPI is the index that is used to measure

the change in the average price level of
goods traded in wholesale market.
 Calculation Of WPI
• Set of 435 commodities & their price
changes are used for calculation.
• Base year is taken as 100.
• WPI for a commodity=
Price at the end-price in the beginning*100
price in the beginning
• Then weighted average of individual WPI is
found.
Calculation Of Inflation Rate

WPI of year end-WPI of beginning of the

year/ WPI of beginning of the year*100
 Advantages of WPI

• Represent wholesale trade transaction

• Available on weekly basis
• Measure inflation
• Quiet handy.
Disadvantages of WPI

• Non-specific in nature.
• Not a proper measure
• Does not include services
Consumer Price Index

• Measures change in price level of

consumer goods & services purchased by
households.
• Used by most of major economies.
 CPI Includes

• Foods and beverages

• Housing
• Apparel
• Transportation
• Medical care
• Education
• Other goods and services
Difference between CPI & WPI

• Little weights to food products in WPI

• Consideration
• Possibility of double counting
• WPI does not reflect actual price hike
• Insignificant goods are included in WPI
How CPI is better than WPI

• More than 100 goods abstained to be

important.
• WPI does not include retail margin
• Service sector is ignored
Why India has not adopted CPI

• Risky and unwieldy

• CPI includes:
CPI industrial worker
CPI non-urban manual employees
CPI agricultural laborers
CPI rural labor
• Too much time lag in reporting CPI
THANK YOU
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