Sri Lanka inflation rockets to new record of 26.2-pct amid money printing

Jan 21, 2008 (LBO) — Sri Lanka’s country-wide inflation hit an all time record 26.2 percent in November 2007, following one of the worst bouts of money printing ever seen in the country, the latest official data showed. The Sri Lanka Consumer Price Index’s (SLCPI) previous high was 24.1 percent recorded in October as the government printed 45.2 billion rupees from April to September 2007 to finance a widening fiscal deficit.

The SLCPI data is released about six weeks after the end of the month, by the Department of Census and Statistics.

Blush

The data comes at an embarrassing time for the authorities who have been ratcheting up the propaganda against the country’s most watched index, the Colombo Consumer Price Index (CCPI) claiming it was “wrong”, because its base year of 1951 was too old.

Economic analysts say the CCPI responds quickly to monetary policy actions as it has a large proportion of ‘non-tradable’ goods in it, though its quick response to money printing has made authorities uncomfortable.

Authorities have since introduced a new index called CCPI (N) which was said to show ‘true’ inflation

The CCPI(N) sharply understated inflation in the first year after it was constr