CENTRAL BANK OF SRI LANKA
Communications Department
30, Janadhipathi Mawatha, Colombo 1.
Tel : 2477424, 2477639,2477420
Fax : 2346257, 2477739
E-mail:[email protected]; [email protected]
PRESS RELEASE
Date: 19.04.07
Issued By: Statistics Department
MOVEMENTS IN THE COLOMBO CONSUMERS’ PRICE INDEX
March, 2007
Movements in the CCPI
The Colombo Consumers’ Price Index for March, 2007
The Colombo Consumers’ Price Index for February, 2007
Monthly Change ( - index points)
Percentage Change ( )
=
=
=
=
5,029.6
5,116.0
86.4
1.7
The general price level continued to decline in March, 2007 compared to prices in the previous
month following the seasonal pattern. The monthly decline in the CCPI was entirely due to the
price decreases of food commodities.
Prices of most food items declined due to the increased supply in both local and international
markets and the implementation of government’s programme to stabilise the prices of ten essential
food commodities during the latter part of the month. The retail prices of most varieties of rice
declined over the previous month due to lower paddy prices as a result of increased supply of Maha
harvest. Prices of vegetables further dropped on account of high stocks, which arrived from major
producing areas. This was reflected in the monthly decreases of the vegetables sub index by 8 per
cent and 10.8 per cent in February and March, 2007 respectively. The retail prices of sugar declined
in response to the low prices prevailing in the international market as a result of increased harvest
in the two main producers viz. Brazil and India, in response to the favourable weather conditions.
However, these price decreases were offset to some extent by the price increases of bread, wheat
flour, fresh fish, prepared foods and meat. On account of limited supply, prices of most varieties of
fresh fish increased in a range of 4 -16 per cent contributing around 0.43 per cent to the change in
the food sub index in contrast to a -0.25 per cent contribution in the previous month (Table 1).
Table 1-Contribution to the monthly decrease in the
2400
2200
2000
1800
Mar-07
Jan-07
Feb-07
Dec-06
Oct-06
Nov-06
Sep-06
Jul-06
Aug-06
1600
Jun-06
-0.08
-3.45
0.51
-1.28
0.09
0.43
-0.20
1.51
Apr-06
Rice
Vegetables
Bread
Sugar
Coconut
Fresh Fish
Dried Chillies
Other
2600
May-06
Food
Commodity
Contribution to the
2.5% decrease in
March 07
Chart 1
Expenditure Values of Vegetables in the CCPI basket (Rs.)
2800
Mar-06
Food Sub Index
In addition, price increases of certain items in the clothing, fuel and light and miscellaneous sub
groups reduced the intensity of the decline in the overall index during the month.
On a point to point basis, the CCPI rose by 19.5 per cent in March, 2007 compared to 6.4 per cent
in the same month of the previous year. Accordingly, the annual average of the index also recorded
an increase of 16.8 per cent. The highest contribution to the overall increase came from food
commodities, which rose by 21.1 per cent in March, 2007. Prices of both domestically produced
and imported food items increased on a point to point basis, consequential upon the build up of
price pressure due to combined effects of increased transportation expenditure following high fuel
prices and disturbances in distribution due to adverse security developments in the Northern and
Eastern provinces. Among the domestically produced food commodities, rice, vegetables, eggs,
most varieties of fresh fish, meat and coconut which have significant weights in the CCPI basket
recorded price increases. Retail price of rice rose by about 41 per cent, prices of fresh fish rose in a
range of 15 – 42 per cent and eggs and coconut prices rose by around 59 per cent and 7 per cent,
respectively. The increase in vegetable prices was in a range of 4 – 36 per cent while prices of meat
rose in a range of 16 – 56 per cent. The high import price of wheat grain raised the prices of wheat
flour and bread by about 37 per cent and 38 per cent, respectively. Among the other major imported
food commodities, the price increases of milk food (4 %– 13%), dhal (20%) some varieties of
condiments (17% - 51%) too made a significant impact on the increase in the food sub index (Table
2).
Table 2 : Percentage Contribution to the Point to Point Change
Sub Index
Food
Of which ;
Rice
Vegetables
Fresh Fish
Bread
Sugar
Coconut
Other Food
Items
Clothing
Fuel & Light
Rent
Miscellaneous
Point to Point
change in the
CCPI
Mar-06
49.89
Mar-07
77.71
-13.53
10.79
18.23
9.28
10.89
-16.15
8.31
25.48
15.00
27.23
-0.36
1.57
48.53
1.22
24.09
0.00
24.80
30.82
0.46
14.39
0.00
7.44
100.0
100.0
The core inflation, which is the part of overall inflation sensitive to monetary policy and measured
after excluding items with high price volatilities and administered prices increased to reach 18.6 per
cent on point to point basis in March, 2007.
The inflation projections indicate that the general price level would decline on a point to point basis
from April, 2007. A favourable influence is expected on inflation as a result of persistently tight
monetary policy as the growth in reserve money has been kept within the limit in the first three
months of 2007. The fluctuations of price levels are expected to narrow down, with the
government’s effort to stabilise prices of certain essential commodities, especially during the
festive season. However, an upward
Chart 2
CCPI Forecast - 2 years ahead
risk on general price level could be
24
prices too are revised upwards,
following the increase in petrol
16
prices by Rs. 7 per litre with effect
12
from 30 March, 2007 (Chart 2).
8
Dec-06
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Point to Point % Change
expected if the diesel and kerosene
20