Sunday, July 5, 2009

WPI over CPI - But why???

Why is WPI used in our country while all other use CPI??

Indian market is unorganised in nature. A single commodity costs different at may be two side by side located shops. Hence to avoid this disparity and to decide on the price to be considered India takes the wholesale price of the commodities in order to produce the inflation figures. Thus the wholesale prices are considered to be a benchmark price of any commodity in India.

Wholesale price would mean the price at which a commodity is traded in its wholesale market.

3 comments:

  1. Why dont you cook it with your inputs? :)

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  2. CPI is a new concept, UK started following it just in 2004, then followed most of the European Nations, CPI lacks some outdated factors like mortgage payments, also it includes some new important factors like mobile phone expenses etc. Also when a country moves to a vibrant economical phase(people moving towards high disposable income) they just overlook basic necessities and move towards lifestyle goods, fashion products etc.
    And to let you know RBI is devising the CPI Index since 2007, we are followers not initiators, it shall be ready in next 2-3 years. UK took almost 8 years devising and implementing the system.

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