Sri Lanka high inflation threatens recent gains in poverty, inequality

April 05, 2008 (LBO) – Lower average inflation and a temporary halt in an internal conflict have lowered Sri Lanka's poverty levels by 2006, government statistics showed, amid warnings that rising prices may reverse the gains. The number of people below the official poverty line fell to 15 percent from nearly 22.7 percent in 2002, according to the Census and Statistics Department's five yearly household income and expenditure survey, which also measures poverty.

Inflation averaged 9.7 percent during the five years when poverty and income inequality narrowed in 17 of the 19 districts covered by the statistics office.

"Income has risen over inflation. Poverty reduced as a result," says Yasantha Fernando, who heads sample surveys at the statistics office.

What's poverty?

In 2006/ 07 a person spending 2,233 rupees or less was officially classified as poor compared to a spending level of 1,423 rupees in 2002 to avoid the poverty classification.

"If a person can spend this minimum amount for basic requirements then he is not poor," explains Fernando

The minimum consumption to avoid poverty, which was 8,900 rupees for a family of four in 2006, is an arbitrary threshold but includes