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Explanation of Wholesale Price Index (WPI, 1995 base) (Revised Version)

May 2001
Bank of Japan
Research and Statistics Department

1. Purpose and use

The Wholesale Price Index (WPI) focuses on the prices of goods traded among corporations. The main purpose of the index is to investigate price movements that sensitively reflect the supply and demand condition of individual goods, with the view to facilitating the analysis of both macro- and micro- economic conditions. The indexes of less aggregated levels also have a role as a "deflator" that transforms nominal output values into real quantities.
It follows from these characteristics of the index that gross transaction values of individual goods, if available, would be the most suitable data for its weight calculation. Unfortunately, such statistics are not regularly available, and hence, WPI has relied instead upon regularly published data such as manufacturer's shipments and custom clearance since its adaptation of weighted averages in 1933.

2. Structure

The WPI is composed of the Domestic Wholesale Price Index (DWPI), the Export Price Index (EPI), the Import Price Index (IPI), and the Overall Wholesale Price Index (OWPI). The first three indexes cover different types of products as indicated below, while the OWPI is a weighted average of these three indexes.

DWPI

The DWPI measures the price movement of domestically-produced and domestically-used goods with "sample price"s collected either from the producer or wholesaler of these goods.
The weights of the index are based on the value of producers' shipments for domestic demand, which are calculated by subtracting the value of exports (from Japan Exports & Imports published by the Ministry of Finance) from the value of total producers' shipments (from Census of Manufactures published by the Ministry of Economy, Trade and Industry). 1

  1. In the case of non-manufacturing products where the value of producers' shipments could not be obtained from Census of Manufactures, other official statistics are used as substitutes.

EPI (IPI)

The EPI (IPI) measures the price movement of export (import) products on FOB (CIF) basis and compiled both in terms of yen and contracted currencies.
The weights are based on the value of exports (imports) obtained from Japan Exports & Imports.

OWPI

The OWPI is the weighted average of the DWPI, EPI, and IPI.