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: 18-05-2007
Issued By: Statistics Department
MOVEMENTS IN THE COLOMBO CONSUMERS’ PRICE INDEX (CCPI)
April, 2007
Movements in the CCPI
The Index for April, 2007
The Index for March, 2007
Monthly change ( - index points)
Percentage change ( )
=
=
=
=
5,025.4
5,029.6
4.2
0.1
The general price level decreased in April, 2007 compared to the prices in the previous month
continuing the declining trend for the third consecutive month for the year. This is a deviation from
the historical monthly behaviour for the month of April. In fact, the sub index for food decreased by
0.8 per cent. However, this impact was offset by the increases in the clothing, fuel and light, and
miscellaneous sub indices reducing the overall decline in the index to 0.1 per cent (Table 1).
Table 1 - Monthly Changes
Monthly Change of the
Index %
Group
Weight Apr-06 Mar-07 Apr-07
All Items
100.0
2.7
-1.7
-0.1
Food
61.9
2.8
-2.5
-0.8
Clothing
9.4
0.0
0.3
0.6
Fuel & Light
4.3
6.0
0.4
0.8
Rent
5.7
0.0
0.0
0.0
Miscellaneous
18.7
0.8
0.5
2.6
Monthly Change of Expenditure
Values Rs
Apr-06
Mar-07
Apr-07
227.75
-174.66
-8.42
168.62
-187.83
-56.41
0.00
0.58
1.25
48.04
4.41
7.87
0.00
0.00
0.00
11.06
8.18
38.87
Prices of food commodities recorded mixed price changes due to the combined effects of increased
supply of ceratin domestically produced food items, continuation of governments’ programme to
stabilise the prices of ten essential food commodities, increased demand generated from the Sinhala
New Year festival and escalation of fuel prices during the month. However, on average,
expenditure on food decreased by Rs. 56.41. Retail prices of rice further declined due to the low
paddy prices recorded especially in Anuradhapura, Kurunegala and Ampara areas as a result of
increased availability of stocks in those areas in response to the higher Maha harvest. Prices of
vegetables too declined for the third consecutive month for the year. Particularly, during the first
two weeks of the month, prices declined remarkably due to the increased supply from main
producing areas resulting in an overall decline in the vegetable sub index by about 3.5 per cent
over the previous month. In contrast, the corresponding figure in the previous year was a 4.4 per
cent increase. Retail prices of sugar and dried chillies further declined in response to the low prices
prevailing in the international market (Table 2).
Table 2 –Contribution to the monthly decrease in the
Food Sub Index
Chart 1
Expenditure Values of Vegetables in the CCPI basket (Rs.)
2800
2600
2400
2200
2000
1800
Mar-07
Jan-07
Nov-06
Sep-06
Jul-06
1600
May-06
Contribution to the
0.8% decrease in
April 07
-0.32
-1.02
0.00
-0.07
0.19
-0.03
-0.14
0.62
Mar-06
Food
Commodity
Rice
Vegetables
Bread
Sugar
Coconut
Fresh Fish
Dried Chillies
Other
However, these price decreases were offset to some extent by the price increases of eggs, meat,
ceratin varieties of condiments, coconut, coconut oil, potatoes and tea dust which have relatively
significant weights in the CCPI basket. Increased demand during the festival season contributed to
these price increases.
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. The partial impact
of the increase in kerosene by Rs. 2/- per litre with effect from 19 April, 2007 contributed to the
increase in the fuel and light sub index.
The increase in the CCPI was 16.3 per cent on a point to point basis in April, 2007 compared to
19.5 per cent recorded in the previous month. The annual average increase recorded in the index
was 17.4 per cent.
On a point to point basis, the highest contribution to the overall increase of around 75 per cent came
from food commodities which rose by 16.9 per cent in April, 2007. The combined effects of both
domestically produced and imported food commodities contributed to the increase in the food sub
index. 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 on a point to point basis (Table 3).
The prices of bread and wheat flour
Table 3 : Percentage Contribution to the Point to Point
Change
also rose by 26 per cent and 37 per cent
respectively due to the high import prices of
Sub Index
Apr-06
Apr-07
wheat grain. Among the other major imported
Food
59.84
74.79
food commodities, the price increases of dhal
Of which ;
Rice
-6.50
7.91
(16 per cent), some varieties of condiments
Vegetables
38.58
14.31
(15% - 50%) and milk foods (3 – 9 per cent)
Fresh Fish
-0.16
15.58
too made a significant impact on the increase
Bread
8.12
31.39
Sugar
8.57
-1.81
in the food sub index. However, price decrease
Coconut
-6.41
3.23
of sugar despite the depreciation of Sri Lankan
Other Food
39.68
33.32
Rupee made a negative impact on the overall
Clothing
1.03
0.63
Fuel & Light
22.75
13.95
increase in the food sub index. Meanwhile, the
Rent
0.00
0.00
price
Miscellaneous
16.38
10.63
increases of petrol(8.6
per cent),
diesel(18.1
per cent) and kerosene(29.9 per cent) during the twelve
Total
100.0
100.0
months period from April, 2006 to April, 2007 had an adverse impact on the index.
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 dropped to 17.7 per cent on a
point to point basis, from 18.6 per cent in March, 2007.
The
projections
indicate that the general price level
Chart 2
CCPI Forecast - 2 Year ahead
would continue to decline on a point to
18
Point to Point % Change
inflation
point basis, which started from April,
14
2007.
A
favourable
influence
is
expected on inflation as a result of
10
persistently tight monetary policy as
the reserve money targets have already
6
May-09
Mar-09
Jan-09
Nov-08
Sep-08
Jul-08
May-08
Mar-08
Jan-08
Nov-07
Sep-07
Jul-07
May-07
been met in the first four
months of 2007. However, there will be upward and downward risks associated with headline
inflation influenced by possible changes in prices due to seasonal factors and administered price
revisions. In response to the fuel price revisions effected thrice during March and April 2007,
electricity charges too may be revised, affecting the overall inflation. Further, the increase in prices
of wheat flour by Rs. 3.50 per kilogram with effect from 4 May, 2007 will also adversely impact on
the index as wheat flour, bread and bakery products bear significant weights in the CCPI basket. In
addition, even though L.P. gas is not an item included in the CCPI basket, the government approval
to increase the gas prices would have an indirect upward risk on inflation in the coming months.