The new index to be released in February next year will be based on a 2006/2007 consumption survey, head of price indices at Sri Lanka's statistics office D C A Gunawardena said.
The index has drawn widespread criticism as an attempt to understate inflation.
The index has dropped alcohol and tobacco from a standard consumption basket under the COICOP (Classification of Individual Consumption According to Purpose) standard the statistics office claims to follow.
Gunawardena said there were no plans as yet to include alcohol and tobacco in the index when it is revised next year.
Critics have said the ad hoc process surrounding the introduction of the index is symptomatic of Sri Lanka's problems of state-centric arbitrary government and lack of true democracy or rule of law for the people.The revised index itself was made 'official' suddenly at the height of an inflation bubble in April 2008, when consumer prices hit 29.9 percent under an older index, the highest ever.
Changing consumption baskets in the middle of high inflation bubbles is a sign of bad governance and money printing governments.
Zimbabwe's Central Statistics Office also stopped its index in the previous year after reporting 3,750 percent inflation in April.
Sri Lanka's statistics office also stopped a countrywide price index saying the numbers were 'politicized', though Sri Lanka is not a one party state yet but a multi-party democracy.
A Reuters news agency report on July 13, 2007 said Zimbabwe's statistics office was working on a one year survey to find out whether the data was "an accurate reflection of the situation in Zimbabwe."
"That's just one aspect of what we're doing ... we are also coming up with a new basket. Both are a long way off and I'm reluctant to give a time frame," Moffat Nyoni, the acting director of the statistics office was quoted as saying by Reuters.
Monetary economists, especially those who favour low inflation and the use of a gold standard to restrain the growth of the state with paper money supply expansion, say understating inflation is central to perpetuating inflationary state finance.
Before the first World War, major central banks always got back to the gold standard by deflating prices to the level seen before an inflationary bubble.
But especially after 1971, when the US dollar finally cut its last links with the gold, a 'little inflation' has been justified as 'necessary'.
Various methods have since been devised to understate inflation and no government has ever attempted to revise an index saying an index showed less than true inflation.
Frequent changes to the consumption basket are the most widely used tactic to understate inflation. People move to cheaper goods when inflation is high, a process described by critics in the United States as 'moving from beef to dog food.'
Gunawardena says the new index would be changed after the lapse of five years.
By introducing a fixed rule based period for re-basing the index (say five years), the arbitrary power of the state to manipulate the index at will could be reduced to some extent and a semblance of 'rule of law' could be brought back.