Difference between CPI and WPI

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The consumer price index (CPI) is a measure of the prevailing price of goods that are traded between the final consumer and the producer or producer's representatives. By measuring the change in the CPI at two points of time, say over a year, one arrives at the CPI inflation, that is the rise in prices for consumers.

 

On the other hand, as the name suggests, the wholesale price index (WPI) is the measure of the prevailing price of goods traded between wholesalers, that is bulk buyers and sellers, who could be the actual producers also. Again, by measuring the change in WPI at two points of time, one arrives at the WPI inflation.

 

For long, WPI was the main measure of inflation in India for the RBI and, hence, for most policy makers. But after Raghuram Rajan became the RBI governor, he has been focusing on CPI as the main inflation gauge.

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