Govt. to change inflation index to cover whole nation

Thursday, 9 January 2014 00:05 - - {{hitsCtrl.values.hits}}

Change of index follows calls for revising existing system
New index to cover entire country, not just the capital
There are shortcomings in national accounts data: IMF

Reuters: Sri Lanka will change its inflation index to change the basket of items and broaden coverage to the whole nation rather than just the capital city, the State-run statistics office said on Wednesday.The index change – the third in seven years – follows calls for revision of the

existing one from the International Monetary Fund and complaints about official statistics from opposition politicians. “The current index does not reflect the whole country,” D.C.A. Gunawardena, head of the Department of Census and Statistics, told Reuters. It represents only 17% of the Sri Lankan population.” He said the change will be made this year and that the base year for calculating the consumer price index will be 2010. The current Colombo Consumer Price Index (CCPI) was introduced in June 2008 with a base year of 2006/7. The Statistics Department Chief said the basket of goods measured will vary depending on the area, but did not give details on how the basket will change. In its latest country report in May 2013, the IMF said there was need for an “All Sri Lanka” index instead of a Colombo index. Under the current index and a previous one, Sri Lanka has had single-digit inflation since February 2009. The IMF, in its May report, said Sri Lanka’s national accounts “suffer from insufficient data sources and undeveloped statistical techniques” and the method for deriving gross domestic product at constant prices was “not satisfactory”. The multilateral lender has said it has been using the Government’s official historic data for its own estimates. Opposition politicians have criticised President Mahinda Rajapaksa’s Government, saying it has overstated growth estimates and given unrealistic inflation figures with an aim of getting lower rates on foreign loans and attracting foreign investors. Official figures show Sri Lanka’s economic growth has been more than 6.3% every year since 2009. One Opposition Member of Parliament, Anura Kumara Dissanayaka, said in December the statistics office had manipulated the 2013 first quarter economic growth rate to be 6% rather than 5.4%. Gunawardena rejected the assertion as “totally baseless”. Central Bank Governor Ajith Nivard Cabraal said the country has a “very sound system” of data collection.