The Department of Industrial Policy and Promotion under Union Ministry of Commerce and Industry on 12 May 2017 revised the base year of All-India Wholesale Price Index (WPI) from 2004-05 to 2011-12. The base year of WPI was revised in order to align it with the base year of other macroeconomic indicators like the Gross Domestic Product (GDP) and Index of Industrial Production (IIP).
In the revised series, WPI will continue to constitute three Major Groups namely Primary Articles, Fuel & Power and Manufactured Products. Increase in number of items from 676 to 697. In all, 199 new items have been added and 146 old items have been dropped. The new series is more representative with increase in number of quotations from 5482 to 8331, an increase by 2849 quotations (52 per cent).
Prices used for compilation do not include indirect taxes in order to remove impact of fiscal policy. This will make the new WPI conceptually closer to ‘Producer Price Index’. A new “WPI Food Index” will be compiled to capture the rate of inflation in food items. Seasonality of fruits and vegetables has been updated to account for more months as these are now available for longer duration. Item level aggregates for new WPI are compiled using Geometric Mean (GM) following international best practice and as is currently used for compilation of All India CPI.
A high level Technical Review Committee has been set up for the first time to carry out dynamic review process in order to keep pace with the changing structure of the economy. A new “Food Index” is being compiled combining the Food Articles under Primary Articles and Food Products under Manufactured Products. The item basket has been revised with inclusion of new items and exclusion of old ones. Basket of commodities has been selected afresh in order to capture the structural changes that have occurred in the economy.
The number of 2 digit groups in Manufactured products has been increased from 12 to 22 in keeping with NIC- 2008. Item level prices do not include indirect taxes. Item level indices are compiled using geometric mean (GM) whereas in the 2004-05 series, arithmetic mean (AM) was used. The electricity sector is now a single item group that includes data relating to average rate of sale of power by generating stations to distributors. In contrast, in WPI (2004-05), retail level tariffs applicable to different sectors were used for compilation of WPI for electricity.