Price declines keep inflation in check

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 the Central Bank said.

According to the new series, the Colombo Consumers' Price Index (CCPI) (2006/07=100), decreased moderately by 0.2 percent to 151.2 in June from 151.5 in May 2011.

The year-on-year inflation moved downwards significantly to 7.1 percent in June from 8.2 percent in May 2011.

However, inflation on an annual average basis increased marginally to 6.7 percent in June from 6.6 percent in the previous month.

Meanwhile, Core inflation both on a year-on-year and annual average bases continued to increase to 8.7 percent and 7.1 percent, respectively in June 2011 as compared to 8.4 percent and 6.9 percent in the previous month.

The contribution to the monthly decrease of 0.2 percent in the Index came mainly from price decreases in the sub group of food and non alcoholic beverages (-1.0 percent).

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.