Movements in new Colombo Consumers' Price Index

PRICE INDEX: The general price level increased in December 2007 compared to the prices in the previous month continuing the positive trend since the month of March of this year.

The sub index for food increased by 0.5 per cent. However, this impact was offset to some extent by the decreases in the vegetables, fish indices resulting in the overall increase in the index to 1.0 per cent.

Prices of food commodities recorded mixed price changes due to the combined effects of increased supply of certain domestically produced food items and increased demand generated from the year end festive season.

On average, expenditure on food increased by Rs. 157.43. Retail prices of vegetables, coconuts and fresh fish declined due to the increased supply from main producing areas.

The table 2 below explains the composition of the increase of 1 per cent. It should be noted that in this basket, certain items play a more significant part than the others, depending on the weight of the market basket of household consumption.

Of the total increase of 1.0 per cent, food items account for an increase of 0.5 per cent, mainly due to increase in the prices of rice (0.3 per cent) meals bought outside (0.2 per cent) and milk, cheese and eggs (0.2 per cent). There is an increase of 0.1 per cent and 0.1 per cent in clothing and footwear and health items.

The increase in the CCPI (N) was 18.8 per cent on a year-on-year basis (pt. to pt.) in December 2007 compared to 19.3 per cent recorded in the previous month.

The annual inflation rate for the month of December (12 month moving average) was registered as 15.8 per cent, higher by 58 percentage points compared to the December last year level of 10.0 per cent.

On a point to point basis, the highest contribution to the overall increase of around 63 per cent came from food commodities which rose by 11.8 per cent in December 2007. The combined effects of both domestically produced and imported food commodities contributed to the increase in the food group.

Among the domestically produced food commodities rice, vegetables, fresh fish, meat, coconuts and banana/papaw which have significant weights in the new CPI basket, recorded price increases on a point to point basis.

The prices of bread and wheat flour also rose by 59.4 per cent and 62.8 per cent respectively due to high import prices of wheat grain in the world market.