Alcohol in CCPI consumer goods basket again
Department of Census and Statistics (DCS) is to upgrade the
compilation methods of its main economic indicators, the GDP and
Consumer Price Index.
Accordingly, the base year will be changed to 2010 and new national
and provincial consumer price indexes too will be introduced. “These
revisions are in line with international standards to reflect the
changes taking place in the economy. A new consumer price index and
provincial indexes for each provinces will be introduced this year.
 The new index will address some issues in the official Colombo
Consumer Price Index (CCPI),” said the Director General of DCS, D.C.A.
Gunawardena.
The new CCPI is based on 2009-2010 consumer prices and a change of
the base year, every five years is the internationally accepted method.
There are allegations that the present CCPI has some deficiencies such
as that it is biased towards urban consumption pattern. CCPI was first
based on 1956 prices and the base year was first changed in 2005 and
using 2002 prices.
Thereafter, a revision was done every five years. The objective of
changing the base year was to better reflect the changes of consumer
behaviour, he said.
Gunawardana said that alcohol will again be in the consumer goods
basket of the index. The previous government removed alcohol from the
consumer item basket in line with its anti-alcohol and tobacco policy,
Mathata Thita and these ad hoc revision of the consumer goods basket
distorted the index value by deflating inflation.
The new base year was introduced to address some challenges
confronting the compilation of national accounts statistics.
Inconsistency and incompleteness in the coverage of the economy,
inclusion of the informal sector into national accounts, lack of data
sources and weak information on each sector are some of them.
The economic environment is continually changing. On the production
side there are structural changes in production patterns over time.
There are emerging economic activities, continuous development,
innovations and obsoleteness of many products.
On the demand side there are structural changes in consumption
patterns, acquisition of capital goods and changes in openness of the
economy to the rest of the world and changes of price structure.
There will be several outcomes in the rebasing of the GDP. The most
obvious effect is that the level of the rebased constant price estimates
of GDP will be much higher than that of the earlier base year estimates
for most series. Therefore, the real GDP growth rates will only be
revised from new base year onwards (tending to be lower) and real GDP
growth rates of previous base years will not be revised.
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