Contents 1. What is a Consumer Price Index 2. Consumer Price Index of Sri Lanka 3. Price collection methods for CPI 4. Inflation & Measuring Inflation

What is a Consumer Price Index

 CPI, measures changes in prices of a fixed basket of goods and services purchased by the households  Quantity and quality of the basket held constant  Select the market basket based on HIES  Cost of the basket of goods and services for the base year equal to 100 What is a Consumer Price Index ( CPI )

Cost of the market basket in the base year =.25,000 Cost of the market basket for i th month =.26,000 CPI in the base year = 100 CPI for the i th month = = What is a Consumer Price Index ( CPI ) What is a Consumer Price Index ( CPI ) 26,000 * ,000

Purpose of a Consumer Price index  A measurement of the inflation  For estimation of national accounts  Policy planning of the country  Formulation of policy for the wages and monetary incomes What is a Consumer Price Index ( CPI ) What is a Consumer Price Index ( CPI )

Consumer Price Indexes of Sri Lanka

2013=100 ( Rs. 32,142.69) 2015 October Consumer Price Index of Sri Lanka CCPI NCPI 1952=100 ( Rs ) 1953 January2008 April 2002=100 ( Rs. 17,996.38) 2008 May 2011 May 2011 June 2006/07=100 ( Rs. 27,972.11) From To Continue

Inflation & Measuring inflation

What is Inflation ?  Inflation is the continues rise in the rate of increase of the Price level of Goods & services.  It is different from price fluctuations in the short-term  Consumer Price Index is used to measure inflation. Inflation & Measuring inflation

Inflation can be measured in two ways 1. Point to Point The percentage change in the NCPI during the last 12 months Inflation Rate in June2016 = NCPI in June NCPI in June 2015 * 100 NCPI in June 2015 Inflation & Measuring inflation

1. Point to Point inflation The percentage change in the NCPI during the last 12 months Inflation Rate in June2016 = NCPI in June NCPI in June 2015 * 100 NCPI in June 2015 Inflation Rate in June2016 = * = 6.4 % Inflation & Measuring inflation NCPI 2013 = 100 YearMonthIndex 2015June June116.1

Inflation can be measured in two ways 2. Average Inflation (12 month moving average) The percentage difference between the average Price Index of last 12 months & the average Price Index of previous 12 months Inflation & Measuring inflation

Rice Meat Fresh Fish & Sea Food Cow Milk Coconuts Fresh Fruits Vegetables Starchy Food(Yams) Inflation & Measuring inflation What is Core inflation ? Roots(Red Onion & B'Onion) Green Chilies & Mushrooms Limes & Curry Leaves Electricity L. P. Gas Kerosene Oil Firewood Petrol, Diesel & Lubricating Oil Transport Services (Train, Bus, Three Wheel, School & Air Fair) Excluded Items for the compilation of Core inflation

Inflation & Measuring inflation Index Number & Inflation of Headline & Core, NCPI 13=100 YearMonth Index NumberInflation NCPINCPI(Core)NCPINCPI(Core) 2015 August %4.3% September %4.9% October %4.8% November %5.8% December %5.8% 2016January %3.0% February %4.6% March %5.0% April %5.9% May %7.2% June %7.5% July %6.8% August %6.0%