A development economist says Sri Lanka needs an independent body that can compile vital statistical data such as the inflation index, free from heavy political influences.

The inflation index, the Colombo Consumers’ Price Index (CCPI) is compiled by the government Department of Census and Statistics. It revised the index in 2008 which drew many criticisms.

During the year the rate of inflation has been declining to 0.7 in August before picking up to 2.8 percent last month.

"There is a tendency these days for trade unions to bargain for pay hikes based on the Cost of Living Index. How can this be if inflation is down? There is a problem. The data is suspect," Dr. Muttukrishna Sarvananthan, Principal Researcher, Point Pedro Institute of Development, told a recent forum.

"The inflation data is compiled by the statistics department which comes under the government and could be subject to political influence. What Sri Lanka needs is an independent institute to compile such data," he said adding that it was the practice in India and the UK to do so.

A senior official of the Department of Census and Statistics told the Island Financial Review that the CCPI is in the process of being revised yet again.

Several analysts criticised the move to replace the old Colombo Consumers’ Price Index with new index now in use saying that it was a move to hide real movement in prices.

However, the Central Bank maintained that the old Colombo Consumers’ Price Index, based on 1952 prices, was outdated as patterns in consumption had changed over the decades.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 23.8 percent.

A statistician said that weights for the selected goods in the new index had been recommended by a technical committee appointed by the Treasury. Food has a larger weight in the index.

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.

On the other hand the following increases can be seen in the weights assigned to the new index from the old: Communication—4.42 from 0.16 percent; Transport—9.47 from 1.76 percent; Electricity—4.09 from 0.43 percent.