Dec 01, 2007 (LBO) – Sri Lanka is about to release an inflation index that shows a lower level inflation a top official said, making the island the latest country to change indices in the face of runaway inflation from money printing. Rising inflation has prompted calls for legislated inflation targeting and full independence for Central Bank or the abolition of institution itself and its replacement with a pre-1951 style currency board. Treasury Secretary P B Jayasundera lambasted the existing Colombo Consumer Price Index (CCPI) which showed 19.6 percent inflation after the government printed 45.2 billion rupees from May to September 2007.
“If we go by our famous consumer price index – only an index favoring the media in my view; not economic policy makers,” Jayasundera told a forum of financial professionals Friday.
“This index has never produced annual average inflation below 10 percent for the last 30 years.”
The government has attempted to change the ‘official’ inflation index several times, but trade unions whose members are paid cost of living allowances based on the CCPI have strongly refused to accept indices that showed a lower level of inflation.
Authorities say the index