Formula of Wholesale Price Index (WPI)
WPI is calculated using the Laspeyres formula, which measures the change in the cost of purchasing the same basket of items in the current period as was purchased in a specified earlier period.
Example:
Assume that the cost of products is ₹4,500 in the current year (2015). To determine the price change, consider 2010 as the Base Year. The base year’s total cost of goods is ₹1,000. Calculate the WPI.
Solution:
WPI= \frac{4,500}{1,000}\times{100}
WPI= 450
The difference between the current year’s WPI and the base year’s WPI is 350 (since the base year’s WPI is regarded as being 100 on the scale).
Also, the WPI for the current year is 350%(2015).