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Sri Lanka’s Department of Census and Statistics (DCS) last week announced the introduction of a Producer’s Price Index (PPI) for the first time in Sri Lanka. The Producer’s Price Index measures the average change over the time in the prices received by domestic producers of goods and services.

The introduction of the PPI in Sri Lanka provides a more complete picture of price movements and trends for making informed decisions

“The overall PPI has decreased by 3.87% in April, 0.29% in May and 1.32% in June as compared to the same months in the previous year. Even though, agricultural price indices have experienced an increase, Electricity & Water Supply price indices have been recorded a decrease over the last three months of the second quarter of 2015. Indices of manufacturing sector reported decrease during the months April and May, while there is a slight increase in June,” the DCS said in a statement.

It added that PPI for all activities reported for April, May, and June of 2015 are 98.38, 99.95 and 98.82 respectively.

PPI is a macroeconomic indicator where it serves as an indicator of short-term inflationary trends and as a deflator of economic series. It is also used in productivity analysis, contract escalation, business analysis and current cost accounting, etc. The PPI measures the average change over time in the prices received by domestic producers of goods and services.

“The PPI is very important to Sri Lanka for a variety of reasons. Up to the present, the Department of Census and Statistics (DCS) has published only one price index – the CPI. A CPI measures changes over time in the prices paid by consumers for a representative set of goods and services. The introduction of the PPI in Sri Lanka provides a more complete picture of price movement and trends for policy-makers and private sector decision-makers,” the DCS said.

PPI is compiled by collecting the producer’s prices for about 514 product items from 376
manufacturing and utility related establishments. Prices of 36 agricultural products are collected from 330 Divisional Secretariat Divisions covering whole country.