Current WPI series to be scrapped, new one with 2017-18 as base yr on cards

The government is at an advanced stage of finalising the new Wholesale Price Index (WPI) series that aims to capture the structural changes taking place in the economy over time. The new base year will be 2017-18, government officials said.

Wholesale inflation rate, measured by WPI, is a crucial measure to capture the dynamic price movements in commodities for bulk buy by traders. The current series of WPI — with base year of 2011-12 —was the seventh revision of WPI and implemented from 2017 onwards.

“At present, approval of various committees are being sought. Once the approval process is completed, the new series will be released. The new series will be launched in an expedited manner,” a government official cited above told Business Standard.

In the current series, all commodities will continue to be categorised into three major groups — primary articles, fuel and power, and manufactured products.  

Right now, primary articles account for more than a fifth of the entire wholesale price index.  Fuel and power has a weightage of 14.9 per cent while manufacturing products account for nearly 65 per cent of the index.

“Several improvements have been introduced in the new series. In addition to updates in the commodity basket and weighting diagram, coverage of commodities has increased by more than 50 per cent with a larger expansion in the manufacturing products group,” the official said.

He added that the number of reporting establishments for each of the commodities is expected to increase from 8,000 to about 13,000.

The current 2011-12 series has 697 items. In the new series, the quality specifications of commodities are being refined in consultation with industry associations and other stakeholders.

“The changes planned in the new series (of WPI) are expected to make the index more robust. The required monthly price data has been collected from April 2017 through an online platform and this continues to be a regular and continuous process. Release of the series with a new base year will enable better analysis of the overall price scenario,” another official said.

Apart from being considered a high-frequency indicator, WPI is also used as a deflator of nominal macroeconomic variables such as gross domestic product (GDP). It also helps the government in formulating various economic policies.

Work in progress

• New WPI series to capture structural changes in the economy
• Approval of various committees being sought before the new series is released
• Coverage of commodities will be increased by 50%
• Number of reporting units for commodities will increase from 8,000 to 13,000