Previous Year Question

In the context of 2012, the Wholesale Price Index (WPI) was the most widely used measure for estimating Inflation in India. It represents the average change in the prices of goods at the wholesale level over time. During that period, WPI was widely used as the Headline Inflation Indicator in India.

The Wholesale Price Index (WPI) includes Primary Articles, Fuel and Power, and Manufactured Products. It covers agricultural products, minerals, petroleum products, and various industrial goods. WPI does not include the prices of services.

In India, WPI is compiled and published by the Office of Economic Adviser (OEA), which functions under the Ministry of Commerce and Industry. The WPI series in use during 2012 had 2004–05 as its base year.

The Consumer Price Index (CPI) measures changes in the retail prices of goods and services purchased by consumers. It includes food, housing, clothing, education, healthcare, and other consumption-related items. CPI is more closely associated with the Cost of Living of consumers.

India introduced a new CPI series covering rural and urban areas in January 2011. Subsequently, the monetary policy framework changed, and after the Flexible Inflation Targeting Framework received statutory backing in 2016, CPI-Combined became the principal indicator for inflation targeting.

Thus, WPI was the most widely used measure of inflation in India in 2012, while CPI-Combined gained prominence in the subsequent monetary policy framework.