Consumer Price Index (CPI) and Wholesale Price Index (WPI)

Two index numbers dominate real economic reporting in India, and Gujarat Std-12 Commerce Statistics students should be able to distinguish them clearly.

Consumer Price Index (CPI), also called the Cost of Living Index, measures the change in the retail prices of a fixed basket of goods and services actually consumed by a specific class of consumers (industrial workers, agricultural labourers, urban non-manual employees, etc.). It is generally constructed by the weighted average of price relatives method, with weights based on each group's share in a typical household's total expenditure:

where $W$ is the expenditure weight of a group (Food, Clothing, Fuel & Lighting, Housing, Miscellaneous, etc.) and $PR$ is that group's price relative.

Wholesale Price Index (WPI) measures the change in prices of goods at the wholesale (first bulk transaction) stage, before they reach the retail consumer. It does not include services and is used mainly to track inflation at the producer/wholesale level rather than the household cost of living.