Why in News?  

Wholesale price-based inflation fell to a 14-month low of 0.39% in May 2025, due to a sharp decline in mineral and non-food item prices, as per data from the Ministry of Commerce and Industry. 

About Wholesale Price Index (WPI)  

• WPI tracks the changes in prices of goods sold in bulk by wholesalers to other businesses.  
• It is compiled and published monthly by the Office of Economic Advisor, Department of Industrial Policy and Promotion, under the Ministry of Commerce and Industry.  
• The index represents an average price level estimate for the entire month rather than a single day.  
• Analysts use WPI data to understand supply-demand dynamics in sectors such as industry, manufacturing, and construction.  
• A rise in WPI signals inflationary pressures in the economy, while a decline indicates deflationary trends.  
• The month-on-month change in WPI quantifies wholesale inflation levels.  

Difference Between WPI and Consumer Price Index (CPI):  

• WPI measures wholesale prices of goods only, whereas CPI captures the average retail prices households pay for a basket of goods and services.  
• WPI excludes services, while CPI includes both goods and services.  
• Although WPI remains a key inflation indicator in many economies, the Reserve Bank of India (RBI) no longer uses it for monetary policy decisions like setting repo rates. Instead, RBI relies   

How is WPI Calculated?  

• WPI is computed as a weighted average of prices for a fixed basket of goods, with weights assigned according to each item's share in total wholesale trade.  
• The basket includes three main groups with respective weights,  
  • Primary Articles (22.62%)  
  • Fuel and Power (13.15%)  
  • Manufactured Products (64.23%)  
• The 2011-12 WPI series tracks prices of 697 items in total: 117 primary articles, 16 fuel and power items, and 564 manufactured goods.