Explanation:

• Wholesale Price Index (WPI) measures the average change in the prices of commodities for bulk sale at the level of the early stage of transactions. The index basket of the WPI covers commodities falling under the three major groups namely Primary Articles, Fuel and Power and Manufactured Products.
• The prices tracked are ex-factory prices for manufactured products, mandi price for agricultural commodities and ex-mines prices for minerals. Weights given to each commodity covered in the WPI basket is based on the value of production adjusted for net imports. WPI basket does not cover services.
• In India, WPI is also known as the headline inflation rate. In India, Office of Economic Advisor (OEA), Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry calculates the WPI. Hence statement 1 is not correct.
• While the direction of the Consumer Price Index is often in sync with the direction of WPI, there may be a divergence as well. The reasons for the divergence between the two indices can also be partly attributed to the difference in the weight of the food group in the two baskets. CPI Food group has a weight of 39.1 percent as compared to the combined weight of 24.4 percent (Food articles and Manufactured Food products) in WPI basket. The CPI basket consists of services like housing, education, medical care, recreation etc. which are not part of WPI basket. A significant proportion of WPI item basket represents manufacturing inputs and intermediate goods like minerals, basic metals, machinery, etc. whose prices are influenced by global factors but these are not directly consumed by the households and are not part of the CPI item basket. Thus even significant price movements in items included in WPI basket need not necessarily translate into movements in CPI in the short run. Hence statement 2 is not correct.