how to calculate WPI ?
WPI or the the wholesale price index is calculated by taking monthly price indexes of 676 items. It is calculated on a base year, where the base year prices are assumed to be 100.
Suppose, price of wheat in 1970= Rs.4.50/kg and in 1980 = Rs.5.60/kg.
Since, the WPI for the base year= 100, WPI for 1980 = 100 + 24.44 = 124.44
Similarly, WPI is calculated for the remaining 675 commodities. Then the weighted average of the individual WPI's is used to estimate the overall WPI.