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Dodgy numbers

The economic statistics that Sri Lanka publishes can’t be trusted.

For example, in 2009 Sri Lanka claimed the construction industry ‘grew’ – despite falling cement volumes and a plunging housing market.

Sri Lanka’s claimed drop in inflation, meanwhile, came after a telling change in the index being tracked, LBO reports.

Inflation reduced?

The government changed the Colombo Consumer Price Index when inflation hit 29.9 percent. At the time a country-wide index was also completely suppressed.

However, the new price index is missing a standard international (COICOP -classification of individual consumption by purpose) expenditure category - it ignores alcohol and tobacco, which is frequently taxed by the government.

By frequently changing the consumption basket of an inflation index, a state can deceive citizens by showing stable 'inflation', despite steeply falling living standards.

US economists have labeled the phenomenon as 'moving from beef to dogfood'.

In Sri Lanka, the share of food in total consumption is 40%.

Food prices have soared, amid autarkic agriculture and tax policies. The government is waging war on (imported) wheat.  

The price of poultry in Sri Lanka is higher than in the United States.

And while the consumption of high-quality rice is falling, while low-quality rice is increasing, figures show.

Central Bank Governor Ajith Nivard Cabraal says average inflation this year will be less than 6 percent and the average rate would be 5 percent or less in 2011.

Poverty falling?

Meanwhile, Sri Lanka claimed this month that poverty has - suddenly - fallen to 7.6 percent from an earlier 15.2 percent.

But, firstly, the survey cited excluded data from the war-torn Tamil districts in the north: Jaffna, Mannar, Kilinochchi and Mulaithivu.

And, secondly, other government data indicated that real incomes in the island have fallen due to high inflation and people are also eating less due to high prices.

The doubts were underlined last week by economist and opposition MP, Harsha de Silva, who asked how poverty could come down so sharply if real incomes fell and food prices rose in the past few years.

“If poverty is halved, why are people not eating?,” he asked.