1.       Unit : Index Number

 

2.       Definition : Same as the UN Definition

UN Definition :

An inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation. The CPI is published monthly. Method of Computation :

Same as UN . Laspeyres index is used to compute the CPI

 

 

 

 

 


It,o = Average HH expenditure at current period in base period goods and services X 100

Average HH Expenditure in base period

 

= Index for the current period t as base period 0

= is the price for ith item in current period t

= is the price for ith item in base period t

= is the quantity of the ith item consumed for month according to the survey from which weights have been assigned in the base period 0

 

Computation of the Index

 

 

 

Where,

 

Wi o = Base Period Weight of the i th item

Pi t = Current period price of the i th item

P to = Base period price of the i th item

 

3.       Limitation

1.       It is based on a single basket of goods, which is an appropriate basis- more-or-less- for some individuals, but not necessarily all individuals.

2.The basket is updated infrequently. Thus, the "appropriateness" of the basket erodes over time until it is updated

3. The information covered only Colombo district.

 

  1. Source- Test Purchasing survey of Consumer goods and services( Weekly),

Department of Census & Statistics