Financial Times

New inflation index next year
The Central Bank is expected to adopt a new inflation index by the middle of 2004 but labour unions, which would have to use the new index in wage negotiations, maintain they have not been consulted about the change.

The new index to measure inflation, called the Sri Lanka Consumer Price Index (SLCPI), will replace the Colombo Consumer Price Index (CCPI) . "The SLCPI is a better index as it is based on prices collected from 20 districts except for those in the northern and eastern province," A. G. W. Nanayakkara, Director General of the Department of Census and Statistics (DCS) told The Sunday times FT.

"Even though the north and the east are now accessible, we haven't included these districts in the computation of the SLCPI because getting the information on time is a problem. If there is sustained peace and if we could receive information on time, we will include these districts in the index sometime next year," Nanayakkara said.
The CCPI, the index used currently, is based on a basket of goods determined in 1952 and takes into account prices only in the city of Colombo.

Trade union leaders said there were unaware of plans to introduce a new index.
Anton Marcus, General secretory of the Free Trade Zone Workers Union, said: "If the government is introducing a new index they should discuss it with the trade unions. Ultimately it is the trade unions that have to bargain with this index for their wages."

He added that the current index needs to be revised as the basket of goods in which the index is based on is outdated. "The CCPI covers only the lower 40 percent of households in Sri Lanka, but the SLCPI covers the lower 80 percent of the households in the island and therefore the middle group is represented better," Nanayakkara said.

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