Inflation according to the new Colombo Consumers’ Price Index—CCPI (N)—soared to 28.2 percent in June from 26.2 percent in May, the Census and Statistics Department announced Monday. The Central Bank said last month that inflation would peak during June-July and subside from August onwards. When the government decided to replace the existing CCPI which had a base year of 1952 with this new index based on 2002, it sparked off protests from several economists of whom one said it was an attempt to "cook-up" an inflation figure that was far less but the Central Bank maintained that the old Price Index was outdated as patterns in consumption had changed over the decades. The old index showed an inflation rate of 28.1 percent in March 2008 while the new index showed an inflation rate of 23.8 percent. Had the old CCPI still been in use the inflation rate could have gone way above 30 percent. A statistician for the Census and Statistics department said that the weights for the selected goods in the new index had been recommended by a technical committee appointed by the Treasury. Food items consisted of 68.3 percent of total expenditure based on the 1952 survey. In the new index food items are given a weight of 46.71 percent. Alcohol and tobacco are not included in the new index in keeping with government policy but analysts believe that by not doing so, the index failed to capture the spending patterns of working class people. The Central Bank said the upward trend in the inflation rate was due to escalating fuel, commodity and food prices across the globe, which the bank said should ease by next month. However little seems to be done to bridle errant traders who raise prices at whim and terminate the monopolistic middlemen in the market. Food prices defer greatly at different ‘polas’ within the greater Colombo district. Facing the food crisis as an integrated region A recently concluded regional conference in Colombo on Strengthening Economic and Social Integration in South Asia called on SAARC to put the food crisis on top of its agenda. A report (in its draft stages) released during the conference said that the institution formed to promote regional integration for the benefit of its people was at best active whenever SAARC Summits were held. A case in point was the Food Security Reserve established in 1988 with the sole purpose of setting up a reserve of grains to be used when member countries faced emergencies. This reserve stood at 241,580 tonnes as at January 2002. It has never been used despite pressing demands and today no one knows its location or anything else about it, the report said. The rise of food prices will throw millions of people into poverty, Akmal Hussain, Senior Fellow, Pakistan Institute of Development Economics told the conference. |
