Sri Lanka should be mindful of impact on poor from new inflation index: CEPA

Jan 17, 2007 (LBO) - A controversy over a new price index in Sri Lanka may have erupted partly because it came at time of high inflation, but the index shows the same trend as earlier ones, an organization focusing on poverty has said.

"However, it is vital to remember that inflation hurts the poor first and foremost; and for this reason the shortcomings of the new index in reflecting the impacts on the poor should not be taken lightly," the Centre for Poverty Analysis (CEPA) said.

The Colombo Consumer Price Index (New) has come under fire as authorities were proposing to use it to index wages, despite its consumption basket not reflecting working class spending patterns.

Alcohol and tobacco (prices of which are frequently raised) has been excluded, apparently on a government directive and replaced with items such as mobile phone charges, which have been constantly falling in real terms and are set to fall further.
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The Centre for Poverty Analysis has released a discussion paper on the issue after an open forum with the participation several panellists including the statistics office.

The statement is reproduced below:

Deconstructing the CCPI(N): Implications of the new index

The Colombo Cons