New national inflation index from November

Reuters: Sri Lanka will introduce a new inflation index with a new base year covering all the provinces of the island from November to better reflect consumption, the Government said on Thursday.

The Cabinet of Ministers approved the proposal to compile National Consumer Price Index (NCPI) while continuing the current Colombo Consumer Price Index (CCPI), which is based on data from the metropolitan area of the capital Colombo.

The NCPI will be compiled with the base year of 2013.

“It facilitates the introduction of new consumer items in place of items which are no longer available,” the Government said in the Cabinet paper.

Officials at the Government statistics office and the Central Bank have said the new data will more accurately reflect real inflation as it covers the whole country.

Both NCPI and inflation at national level will be released on the 21st of every month starting from November with a time lag of 21 days, while CCPI will be compiled and published on the last day of the month, the Government said.

The CCPI was first compiled with the base year of 1952, but it was changed to 2002 eight years ago and then to 2006/07 five years ago.

Prime Minister Ranil Wickremesinghe’s ruling United National Party (UNP) accused the last Government, led by former President Mahinda Rajapaksa, of manipulating inflation numbers through not representing an appropriate consumer basket for CCPI.

CCPI has fallen in the last three months after the new Government reduced prices fuel, energy, and of a raft of essential goods after Rajapaksa’s defeat in January’s presidential election.

Under Rajapaksa, annual inflation hit a record high of more than 28% in 2007, before the authorities changed the base year and consumer goods basket twice.

The annual inflation has been in single digits since February 2009, under CCPI with the base year of 2006/7.