Central Bank explains June inflation under new CCPI

Thursday, 7 July 2011 00:46 - - {{hitsCtrl.values.hits}}

In June 2011, the Department of Census and Statistics released a new series of the Colombo Consumers’ Price Index based on a revised weight structure. The index is now computed on weights based on the expenditure patterns of households in the urban areas of the Colombo district as revealed in the Household Income and Expenditure Survey (HIES) 2006/2007.

The earlier series was based on expenditure patterns of households in the urban areas of the district of Colombo revealed in the HIES 2002. Therefore, the new index series will be computed on a more up-to-date weight structure which will reflect more recent changes in the pattern of expenditure and consumption. On this basis it will therefore be a better gauge of consumer inflation trends. It is the practice among statistical agencies to revise weights of consumer price indices periodically based on more up-to-date information, to capture the most recent consumption trends. Most countries adopt a five year rebasing of the Consumer Price Index. According to the new series, the Colombo Consumers’ Price Index (CCPI) (2006/07=100), decreased moderately by 0.2% to 151.2 in June from 151.5 in May 2011.

The year-on-year inflation moved downwards significantly to 7.1% in June from 8.2% in May 2011. However, inflation on an annual average basis increased marginally to 6.7% in June from 6.6% in the previous month. Meanwhile, Core inflation both on a year-on-year and annual average bases continued to increase to 8.7% and 7.1%, respectively in June 2011 as compared to 8.4% and 6.9% in the previous month.

The contribution to the monthly decrease of 0.2% in the Index came mainly from price decreases in the sub group of food and non alcoholic beverages (-1.0%). Within the Food sub category, prices of almost all varieties of vegetables, fruits, coconut, coconut oil, rice, dhal, chicken and eggs declined due to improvements in supply, while prices of fish and seafood increased. However, prices in the sub categories of Clothing and footwear (1.3%); Housing, water, electricity, gas and other fuels (0.3%); Furnishing, household equipment and routine household maintenance (1.0%); Health (0.4%); Transport (0.8%) and Miscellaneous goods and services (0.1%) increased. Meanwhile, the prices in the sub categories of Communication, Education and Recreation and culture remained unchanged during the month.