Sri Lanka inflation at 2.5-pct in February by citizen index

Mar 03, 2014 (LBO) – Sri Lanka’s inflation in February 2014 was measured at 2.5 percent by an index compiled by private citizens, coming below the 4.2 percent indicated by the state statistics office. Sri Lanka’s credit growth has been weak in the past year and the Central Bank has also been sterilizing foreign exchange purchases.

There has been controversy regarding state economic statistics including inflation due to base revisions at peak inflation periods and also discontinuing of a country wide index when inflation was high.

Such tactics are also found in other high inflation countries including Argentina and Venezuela.

State-compiled indices contain various statistical ruses to understate volatility in inflation in particular, with the United State among the worst offenders.

The CAL Urban Index, compiled by Capital Alliance Research, a Colombo based consultancy, uses price data from around the country while the Colombo Consumer Price Index compiled by the state statistics office uses prices in the capital.

In January the CAL Urban Index said prices rose 2.0 in the 12-months while, the state measurement came in at 4.2 percent.

The two indices diverged widely in 201