Wholesale Price Index (WPI)

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Wholesale Price Index (WPI)

Key takeaways
* The Wholesale Price Index (WPI) tracks changes in prices of goods at the producer or wholesale stage, before they reach retail consumers.
* It serves as an inflation indicator for the earlier stages of the supply chain.
* In the United States the WPI was redefined and renamed the Producer Price Index (PPI) in 1978; modern PPI separates prices by stage of production (intermediate vs. finished goods).
* WPI composition and coverage vary by country and can range from a few hundred to thousands of products.

What is the WPI?

The Wholesale Price Index measures the overall change in prices that producers or wholesalers receive for goods over time. It is usually reported as the percentage change from a prior month or year and is used to gauge inflationary pressures before consumer prices are affected.

How the WPI is calculated

  • The index uses a base period set to 100. Subsequent aggregate price changes are expressed relative to that base.
  • Example: If the base period is January 2021 (index = 100) and aggregate producer prices rise 9.7% over the next year, the index for January 2022 would be 109.7.
  • WPIs are typically published monthly.
  • The basket of goods included varies by country and is periodically updated to reflect changing economic structures. Larger economies generally include thousands of items; smaller ones may cover only a few hundred.

Uses

  • Monitoring inflation at the production/wholesale stage.
  • Serving as a leading indicator for consumer price inflation (changes often precede retail price moves).
  • Informing business pricing, contract escalation clauses, and macroeconomic analysis.

Limitations

  • Sensitive to commodity price volatility, which can distort short-term readings.
  • Coverage and methodology differ by country, making international comparisons imperfect.
  • Some historical WPIs did not include wholesaling intermediaries explicitly; definitions matter for interpretation.

WPI vs. PPI (U.S. context)

  • The U.S. published a wholesale price index beginning in the early 20th century. In 1978 the Bureau of Labor Statistics (BLS) renamed and restructured it as the Producer Price Index (PPI).
  • The change reflected that the U.S. series historically measured producer (not wholesale-intermediary) prices and moved to a stage-of-production approach to reduce double counting.
  • Modern PPI aggregates prices into final demand and intermediate demand indexes, distinguishing finished goods from intermediate goods.

Sources

  • U.S. Bureau of Labor Statistics — Producer Price Index materials
  • Encyclopaedia Britannica — Wholesale Price Index overview
  • Lawrence J. Kaplan, “A Guide to the Federal Government’s Indexes of Wholesale Prices,” The Analysts Journal (1957)