2. 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

3. What is a Consumer Price Index

4.  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 )

5. 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 = = 104.0 What is a Consumer Price Index ( CPI ) What is a Consumer Price Index ( CPI ) 26,000 * 100 25,000

6. 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 )

7. Consumer Price Indexes of Sri Lanka

8. 2013=100 ( Rs. 32,142.69) 2015 October Consumer Price Index of Sri Lanka CCPI NCPI 1952=100 ( Rs. 202.24) 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

9. Inflation & Measuring inflation

10. 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

11. 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 2016 - NCPI in June 2015 * 100 NCPI in June 2015 Inflation & Measuring inflation

12. 1. Point to Point inflation The percentage change in the NCPI during the last 12 months Inflation Rate in June2016 = NCPI in June 2016 - NCPI in June 2015 * 100 NCPI in June 2015 Inflation Rate in June2016 = 116.1 - 109.1 * 100 109.1 = 6.4 % Inflation & Measuring inflation NCPI 2013 = 100 YearMonthIndex 2015June109.1 2016June116.1

13. 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

14. 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

15. Inflation & Measuring inflation Index Number & Inflation of Headline & Core, NCPI 13=100 YearMonth Index NumberInflation NCPINCPI(Core)NCPINCPI(Core) 2015 August108.4110.81.9%4.3% September108.4111.41.9%4.9% October109.2111.83.0%4.8% November112.0112.74.8%5.8% December113.2112.94.2%5.8% 2016January112.0113.4-0.7%3.0% February110.8113.91.7%4.6% March110.0114.32.2%5.0% April111.6115.74.3%5.9% May113.7117.55.3%7.2% June116.1118.26.4%7.5% July115.2117.95.8%6.8% August113.3117.44.5%6.0%