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.

Now,

$WPIforwheatin1980=\frac{Priceofwheatin1980-Priceofwheatin1970}{Priceofwheatin1970}\times 100\phantom{\rule{0ex}{0ex}}\phantom{\rule{0ex}{0ex}}=\frac{5.60-4.50}{4.50}\times 100\phantom{\rule{0ex}{0ex}}=24.44\phantom{\rule{0ex}{0ex}}$

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.

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