Sri Lanka new price index shows 19.3-pct inflation

Dec 04, 2007 (LBO) – A new index to measure inflation in Sri Lanka's capital Colombo, showed that prices had risen by 19.3 percent in the past 12 months, a tad lower than the 19.6 percent measured by the existing index. The government's statistics office which computes price indices says the Colombo Consumer Price Index (CCPI) was not a "true measure" of inflation because its base is counted on the consumption pattern of a working class household 50 years ago.

All Inclusive

The new index called the CCPI(N) is based on the 2002 consumption patterns of all urban households in Colombo.

Data is collected from 12 urban centres in Pettah, Maradana, Wellawatte, Dematagoda, Grandpass, Borella, Kirulapone, Dehiwala, Kotte, Nugegoda, Kolonnawa and Ratmalana compared to seven centres earlier.

Authorities have been unhappy with the CCPI index as it showed high levels of inflation. The index responds quickly to money printing by the government to bridge the budget deficit.

The criticism that the CCPI index is "wrong" came while a country-wide index, the Sri Lanka Consumer Price Index (SLCPI) showed even higher levels of inflation.

In September inflation measured by the SLCPI was 22.1 percent c