FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka


Submit PostSubmit Post
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post



Latest topics

» Amendments to be incorporated into Colombo Port City Bill – GL
by samaritan Today at 4:07 pm

» FUTURE of BROWNS INVESTMENT PLC (BIL)
by ADVENTUS Today at 4:04 pm

» KGAL - THE SLEEPING GIANT
by THASSIM Today at 2:34 pm

» CHRISSWORLD THE IPO
by Wickyz Today at 2:10 pm

» hospital sector
by cheetah Today at 1:51 pm

» ACCESS ENGINEERING ( AEL.N )
by samaritan Today at 1:14 pm

» GLAS will be winner with Super Gain.
by Eranga87 Today at 12:36 pm

» BOGA heating .....
by Thushara Ayya Today at 11:12 am

» THE COLOMBO FORT LAND & BUILDING PLC (CFLB.N0000)
by David VKMS Today at 10:46 am

» Haycarb’s bottom line likely to boost with Tesla’s electric vehicles push worldwide (HAYC)
by MarketWch Today at 6:27 am

» First capital holdings CFVF.N0000
by SL-INVESTOR Yesterday at 9:11 pm

» CONTRADICTARY statements BY BUYER & SELLER RE: MGT & GREG
by GHERATH72 Yesterday at 9:02 pm

» TOKYO CEMENT COMPANY (LANKA) PLC
by ADVENTUS Yesterday at 4:27 pm

» NATIONAL DEVELOPMENT BANK PLC (NDB.N0000)
by shihan 93 Yesterday at 1:16 pm

» Sunshine holding future potential
by Zahara khan Yesterday at 12:43 pm

» Sri Lanka Bonds Go From Asia’s Worst to Best After China Loan
by CHRONICLE™ Yesterday at 7:27 am

» The market changes fast; it is OK to get out when you feel it is right and take the profits that you can. Stock market for beginners
by Asoka Samarakone Sun May 16, 2021 10:04 pm

» Ban of chemical fertilizers is a great news
by dayandacool Sun May 16, 2021 9:50 pm

» Economic Uncertainty Drives Crypto Growth in Sri Lanka
by CHRONICLE™ Sun May 16, 2021 9:23 pm

» DIPPED PRODUCTS PLC (DIPD.N0000)
by ADVENTUS Sun May 16, 2021 4:37 pm

EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

CHRONICLE™ NEWS PRODUCTS

FINANCIAL CHRONICLE™

Views & Reviews, Analysis, Evaluations, Discussions, Gossip and Hot Tips relating to Sri Lankan companies listed on the Colombo Stock Exchange (CSE)
Contribute




DAILY CHRONICLE™

Latest news and articles published in Newspapers, Websites, Blogs and other online news sites relating to business and investments in Sri Lanka
Contribute



ECONOMIC CHRONICLE™

This is a section that provide news, views, analysis, predications relating to Political and Socio-Economic factors and how such activities affect the Stock Market and other economic activity of the Country.

Contribute




EXPERT CHRONICLE™

This is an exclusive section for Expert Articles which will help member to share knowledge through comments and responses of the members. All members are allowed to reply and make comments to these articles.

Contribute


Submit Post


CHRONICLE™ YouTube

Youtube Videos and other visual presentations relating Stock market and other investment advise submitted by members or other contributors.

Contribute


Submit Post


කොළඔ කොටස් වෙළඳපොළේ වංශකථාව
කොළඔ කොටස් වෙළඳපොළේ ලැයිස්තුගත සමාගම් කොටස් ගැන තොරතුරු¸විශ්ලේෂණ¸සාකච්ඡා¸ කටකතා¸රසකතා යන සියල්ල අපේම සිංහලෙන් කතා කළ හැකි ‘කතා මණ්ඩපය’

Contribute

Twitter Feeds
POPULAR COMPANIES
A

ABANS ELECTRICALS PLC

ACCESS ENGINEERING PLC Hot

ACL CABLES PLC

ACL PLASTICS PLC

ACME PRINTING & PACKAGING PLC

AGSTAR PLC

AITKEN SPENCE HOTEL HOLDINGS PLC

AITKEN SPENCE PLC

ANILANA HOTELS AND PROPERTIES PLC

ARPICO INSURANCE PLC

ASIA ASSET FINANCE PLC

ASIA CAPITAL PLC

B

BAIRAHA FARMS PLC

BALANGODA PLANTATIONS PLC

BIMPUTH FINANCE PLC

BLUE DIAMONDS JEWELLERY WORLDWIDE PLC

B P P L HOLDINGS PLC

BROWNS BEACH HOTELS PLC

BROWNS INVESTMENTS PLC

C

CARGO BOAT DEVELOPMENT COMPANY PLC

CENTRAL INDUSTRIES PLC

CEYLON COLD STORES PLC

CEYLON GRAIN ELEVATORS PLC Hot

CEYLON TEA BROKERS PLC

CEYLON TOBACCO COMPANY PLC

CHEVRON LUBRICANTS LANKA PLC

COLOMBO FORT LAND & BUILDING PLC

COMMERCIAL BANK OF CEYLON PLC

CITRUS LEISURE PLC Hot

COMMERCIAL CREDIT AND FINANCE PLC

D

DANKOTUWA PORCELAIN PLC

DFCC BANK PLC

DIALOG AXIATA PLC

DIALOG FINANCE PLC

DIPPED PRODUCTS PLC

DISTILLERIES COMPANY OF SRI LANKA PLC

DUNAMIS CAPITAL PLC

E

EAST WEST PROPERTIES PLC Hot

EASTERN MERCHANTS PLC

EXPOLANKA HOLDINGS PLC

E-CHANNELLING PLC

F

FIRST CAPITAL HOLDINGS PLC

G

GALADARI HOTELS (LANKA) PLC

GUARDIAN CAPITAL PARTNERS PLC

H

HATTON NATIONAL BANK PLC

HAYLEYS PLC

HAYLEYS FABRIC PLC

HAYLEYS FIBRE PLC Hot

HEMAS HOLDINGS PLC

HIKKADUWA BEACH RESORT PLC

HNB ASSURANCE PLC

HVA FOODS PLC

J

JANASHAKTHI INSURANCE COMPANY PLC

JOHN KEELLS HOLDINGS PLC Hot

JOHN KEELLS HOTELS PLC

L

LANKA ASHOK LEYLAND PLC

LANKA IOC PLC

LANKEM CEYLON PLC

LANKEM DEVELOPMENTS PLC

LAUGFS GAS PLC

LAUGFS POWER LIMITED

LOLC FINANCE PLC

LOLC HOLDINGS PLC

LUCKY LANKA MILK PROCESSING COMPANY PLC

M

MELSTACORP PLC

N

NATIONAL DEVELOPMENT BANK PLC

NATION LANKA FINANCE PLC

NESTLE LANKA PLC

O

ORIENT FINANCE PLC

OVERSEAS REALTY (CEYLON) PLC

P

PANASIAN POWER PLC

PEOPLE'S LEASING & FINANCE PLC

PIRAMAL GLASS CEYLON PLC

PRIME FINANCE PLC

R

RAIGAM WAYAMBA SALTERNS PLC

RENUKA AGRI FOODS PLC

RENUKA CAPITAL PLC

RENUKA HOLDINGS PLC

RICHARD PIERIS AND COMPANY PLC

RICHARD PIERIS EXPORTS PLC Hot

ROYAL CERAMICS PLC

S

SAMPATH BANK PLC

SEYLAN BANK PLC

SIERRA CABLES PLC

SINGHE HOSPITALS PLC Hot

SMB LEASING PLC

SOFTLOGIC HOLDINGS PLC

SOFTLOGIC LIFE INSURANCE PLC

SRI LANKA TELECOM PLC

SWISSTEK (CEYLON) PLC Hot

T

TEEJAY LANKA PLC

TESS AGRO PLC

THREE ACRE FARMS PLC

TOKYO CEMENT COMPANY (LANKA) PLC Hot

U

UNION BANK OF COLOMBO PLC

V

VALLIBEL FINANCE PLC

VALLIBEL ONE PLC Hot

VALLIBEL POWER ERATHNA PLC

W

WASKADUWA BEACH RESORT PLC


You are not connected. Please login or register

FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » CoL: Perceptions and calculations of price increases

CoL: Perceptions and calculations of price increases

Go down  Message [Page 1 of 1]

CSE.SAS

CSE.SAS
Global Moderator
People’s perception of prices and official assessments of price increases rarely coincide. This is especially so when the official indices indicate rather low rates of price increases at a time when basic consumer items have risen sharply. The market place gives a different picture to the statistical calculations. The poor are in severe difficulties owing to prices of basic food items and utilities increasing sharply. It is the hardships caused by the increased prices that have caused discontent among people about the cost living and
scepticism about the official calculations.

Credibility of figures
There is lack of credibility of official statistics. The Central Bank of Sri Lanka’s Annual Reports have lost their credibility. Many of the assessments of the economy are deemed political propaganda rather than statements of actual economic conditions. Two statistics of the Central Bank that have drawn criticism have been the annual growth rate and the rate of inflation. Both these are, however, not calculated by the Central Bank though most criticism is directed to it. The national accounts of the country and the monthly consumer price indices are compiled by the Department of Census and Statistics. However, as a user of these data the Central Bank has a responsibility to be sufficiently assured of their integrity. Instead it is believed that the Central Bank is hand in glove with the Department of Statistics to churn out favorable figures. This assertion would, no doubt, be contested by both parties to the alleged misdeed. Since the accusation cannot be proved in “open court”, it remains a matter of conjecture.

The fact, however, is that unlike for many years of the past when the integrity of both the Central Bank and the Department of Census and Statistics was not in question, the credulity of the statistics has become common talk. In Sri Lanka, this deterioration in official integrity is a part of the process of politicisation that has occurred in the country for several years. Important economic documents produced by the government and autonomous agencies sound more like propaganda for the government than objective assessments of the economy. In Sri Lanka, common talk has more than a grain of truth. The grapevine is a source of good information as well as of rumour.

Consumer Price Index
The accuracy of a price index depends on the basket of consumption items selected, the weightage assigned to each item and the methods of collecting the price data. The basket of commodities selected should, as far as possible, be representative of the consumption pattern of the particular economic class. In order to ensure this, the basket is decided on the basis of consumption obtained in surveys such as the Consumer Finances and Socio Economic Survey of the Central Bank or the Household Income and Expenditure surveys of the Department of Census and Statistics.

Once a basket is selected it is important that this basket is not altered. If there are changes in the items in the basket or their weights, then the comparisons over time would not reflect changes in the cost of living. Dropping items on the basis that commodities like alcohol are either unhealthy or unethical is a distortion of the index, as these items are selected because they are representative items of consumption. Similarly, it is incorrect to drop items of consumption on the grounds that they are not consumed as they are too expensive. Substitution of one item for another is only permitted when it is inevitable and in such an eventuality it must be substituted by a similar commodity. For instance, if a particular brand of soap is no longer available, then it may be substituted by the closest similar other brand in the market. The issue is whether such principles and others are observed. Information from the grapevine suggests that there are serious violations of these principles.

Perceptions
Even when an index is properly calculated, there could be difference in people’s perception from that of the index. This happens often owing to several reasons. One common reason is that each consumer has her or his different consumption pattern. The prices of these could vary from that of the average consumption basket used by the index. For instance, someone, who consumes a lot of alcohol, would find his expenses rising more if alcohol prices are increased substantially.

On the other hand, a household that is a self-sufficient and consumes very little from the market would not feel the price increases in the market much. In the current context those who consume milk powder, dhal, imported fruits, consume much electricity and gas, would find their cost of living rising sharply. Therefore, however correctly an index is computed, there could be a difference in the rise in the cost of living that is computed and popular perception. Sometimes the popular perception may be more accurate than the index. Sometimes the popular perception may not be based on facts.

Rate of increase
Statistics of a lower inflation rate is generally received with scepticism by the general public. There are many reasons for this. The public perception of inflationary trends is often based on a misunderstanding of the statistics on inflation. The deceleration in inflation is not believed as it is often understood as a decline in prices. This is certainly not the case. What it means is that the rate of increase has declined. Prices are still continuing to increase though at a lower rate. When people experience further increases in prices, they tend to disbelieve that the rate of inflation has declined, as prices of commodities have not decreased. If the annual rate of inflation were to be 8 percent this year, what this means is that average prices rose by 8 percent. This is an increase on top of last year’s increase in prices.

Cost of Living
Despite these observations, both national and international assessments are based on the figures in the Colombo Consumers Price Index. On this basis we have had a relatively low rate of price increases. The public, on the other hand, are of the view that prices have increased by a high rate.

International perception
The international perception of price increases based on the Department of Census and Statistics is a very favourable one. The most recent instance of this was at a SAARAC conference on May 16, 2012. Speaking at the annual SAARCFINANCE Governors’ Symposium in Nepal; Dr Sultan Hafeez Rahman, former Director General, South Asia Department of the Asian Development Bank (ADB) said that in comparison to other countries in SAARC Region, Sri Lanka is seen as the country where poverty levels would be least affected by food prices. This is music to the ears of the government.

The perception of many economists in Sri Lanka and, perhaps the public, is quite different. The increases in prices of basic items have driven the poor to desperate conditions. In fact, the downside of the recent policy measures is that they have increased the costs of the living of the lower income groups and increased their deprivations. The poor can’t live on statistics.
http://www.nation.lk/edition/opinion/item/6442-col-perceptions-and-calculations-of-price-increases.html
http://www.nation.lk/edition/opinion/item/6442-col-perceptions-and-calculations-of-price-increases.html

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum