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Question

The wholesale price index (WPI) grew 11.16 per cent during the month of July, while the WPI for June was 12.07 per cent, the data showed. The WPI in August 2020 was at 0.41 per cent. “The high rate of inflation in August 2021 is primarily due to rise in prices of non-food articles, mineral oils; crude petroleum & natural gas; manufactured products like basic metals; food products; textiles; chemicals and chemical products etc as compared the corresponding month of the previous year,” the ministry statement said. The food articles segment witnessed a (-)1.29 per cent change in August, the data showed. In the month prior to that, this was zero per cent.

Consider the following Statements.

(I) WPI tracks inflation at the wholesale level and CPI captures changes in prices levels at the consumer level.

(II) WPI does not capture changes in the prices of services, which CPI does.

(III) In WPI, more weightage is given to manufactured goods, while in CPI, more weightage is given to food items.

A Only 1 Correct Answer Incorrect Answer
B 1 & 2 Correct Answer Incorrect Answer
C 1 & 3 Correct Answer Incorrect Answer
D Only 3 Correct Answer Incorrect Answer
E 1, 2, & 3 Correct Answer Incorrect Answer

Solution

What is the difference between CPI and WPI? WPI tracks inflation at the producer level and CPI captures changes in prices levels at the consumer level. WPI does not capture changes in the prices of services, which CPI does. In WPI, more weightage is given to manufactured goods, while in CPI, more weightage is given to food items.  

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