# **Consumption aggregate**

For the sake of reaching the maximum comparability across years, in all analysis concerning the poverty decomposition, we modified the official consumption aggregate constructed by DCS, by excluding durables goods (codes 3300s), other expenses not strictly referable to consumption (such as insurance, or income taxes, codes 3400s) and other ad hoc and rarely incurred expenses (codes 3500s). Moreover, we excluded few items due to changes in the questionnaire (additional items and items for which the reference period was changed). Monthly temporal price differences over the survey period are not considered and only spatial price differences are adjusted as DCS did for the official consumption aggregate used to measure poverty.

# **The Poverty Line**

The national poverty line in Sri Lanka has been set to 1,423 Rs in 2002, by using the Cost of Basic Needs approach based on 2030 Kilocalories per capita per day, and it has been then updated monthly using the Colombo Consumer Price Index (ccpi). It is worth noticing that the base year for computation of the ccpi has changed three times over the period 2002 – 2012/13. The initial poverty line of 1423 Rs in 2002 prices has been updated to 2006/07 prices for the official DCS poverty report by using the ccpi 1952-base, which led to a poverty line of 2,233 Rs in 2006/07 prices (DCS, 2008). In more recent publications, instead, the DCS has used for 2006/07 the poverty line of 2,142 Rs, obtained by inflating the 2002 poverty line with ccpi 2002-base. For the 2009/10 survey, the original poverty line has been updated by using the ccpi 2002base, leading to a poverty line of 2,142 Rs in 2009/10 prices. Finally, the base year for ccpi calculation was changed from 2002 to 2006/07 since June 2011.11 To date (November 14th 2014), there is no official poverty line published for the entire survey year 2012/13. Nevertheless, by applying the twelve months (from July 2011 to June 2012) average of the ccpi 2006/07-base to poverty line as expressed in 2006/07 prices, we obtain 3,624 Rs, which we consider the official poverty line for 2012/13.

Table Table A1.2 summarizes the history of the official poverty lines, underlying the discrepancies due to the change in base year for the computation of the ccpi.

**-** **<u>Table A1.2: Poverty Line, 2002 2014, Rs per person per month</u>**

|**Period**|**Official**<br>**Line**<sup>12</sup>|**Base Year 1952**|**Base Year 2002**|**Base Year 2006/07**|
|---|---|---|---|---|
|2002<br>2006/07<br>2009/10<br>2012/13|1,423<br>2,142<br>3,028<br>-|-<br>1,423~~*~~<br>�<br>��<br>∑<br>�����<br>�����<br>��<br>��������<br>��<br>�<br>��<br>∑<br>�����<br>�����<br>��<br>�������<br>��<br>�<br>2,233<br>-<br>-|-<br>1,423~~*~~<br>�<br>��<br>∑<br>�����<br>�����<br>��<br>�������<br>��<br>�<br>2,142<br>1,423~~*~~<br>�<br>��<br>∑<br>�����<br>�����<br>��<br>�������<br>��<br>�<br>3,028<br>-|-<br>-<br>2142_~~*~~_<br>�<br>��<br>∑<br>�����<br>�������<br>��<br>���������<br>��<br>�<br>2,955<br>2142~~*~~<br>�<br>��<br>∑<br>�����<br>�������<br>��<br>���������<br>��<br>�<br>3,624|

Source: Official Line: 2002, 2006/07 and from 2013 Oct, http://www.statistics.gov.lk/poverty/monthly_poverty/index.htm; 2006/07 DCS (2011, p.1). Colombo Consumer Price Index (ccpi): http://www.statistics.gov.lk/page.asp?page=Inflation%20and%20Prices

> 11 http://www.statistics.gov.lk/poverty/monthly_poverty/index.htm

> 12 This is the official poverty line as published by the Department of Census and Statistics, Sri Lanka, the 7th October 2014. Note that for the poverty numbers published in the official report based on 2006/07 survey (http://www.statistics.gov.lk/poverty/PovertyIndicators.pdf), the poverty line used is 2,233 Rs, which is obtained by inflating 2001/02 poverty line to 2006/07 prices using the ccpi index 1952 base.

30