What are wholesale price index and retail price index? What is the difference?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The wholesale price index and the retail price index are both indices that can be used to measure inflation.  Each of these indices attempts to measure the general cost of goods in a country at a given time.  Each index does so by comparing the prices of a set “basket” of items to their prices at a given point (called a base year) in the past.

The difference between these two indices has to do with when the prices of the goods are measured.  The retail price index, of course, measures the prices of the goods when they are sold at retail.  That is, it measures the prices of final goods that are being sold to consumers.  By contrast, the wholesale price index measures the prices of goods when they are being sold to retailers, not when they are being sold to the final consumers.


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