right now. if they expect that the prices on average would rise, then, they can be said to be harboring high inflation expectations. a central bank can gauge this situation by conducting periodical inflation expectation surveys. second, a consumer price index, compiled to measure the changes in the cost of living of a given group of people, may show a continuous increase over a substantial period of time. it indicates an unstable situation in the macro economy leading to an upward movement in the general price level. the presence of either situation requires a central bank to go into action against fighting inflation. this means that, even if the consumer price index shows stability or a relatively low growth, the central bank cannot stop taking inflation fighting measures. what a central bank should do is to eradicate the cause rather than pampering with the symptoms. it is similar to a physician who does not take delight when he observes that the high fever of a patient has subsided. the physician would not stop his curative treatment, until the cause of that high fever is totally eliminated. there appears to be a general tendency for equating increases in the cost of living with inflation. an increase in the cost of living occurs when the basket of commodities consumed by a given group of people entails a higher cost. as mentioned earlier, this is measured by compiling a consumer price index. a central bank cannot do anything about the increases in the cost of living, since it does not produce goods and services. that is why john exter, the founder governor of the central bank, remarked in his very first press interview that “ … the bank does not itself produce goods and services. it will facilitate it by creating right monetary conditions ” implicit in these “ right monetary conditions ” is the need for attaining economic and price stability in its totality. inflation is a much wider phenomenon than the cost of living. it entails the absence of stability in the macro economy leading to an increase in all the prices at the same time. a consumer price index measures the price impact on a consumption basket consisting of only consumer goods. in contrast, inflation occurs when the prices of all goods, consumption, intermediate, investment and inputs, rise at the same time. it elevates the general price level to a higher level, including those of the consumer goods. the above misunderstanding may lead to the pitfall of a central banker trying to stabilize the value of a cost of living index through artificial means. it can be attained by fixing price ceilings or granting price subsidies

we all have to push ourselves to a greater productivity level. we have to, • work smarter, • combine better, • deliver results, • get it right. it should be noted that the private sector has continued to make commendable efforts in order to improve productivity in the country. what can the icc sri lanka do? icc sri lanka too can play a prominent and essential role. since your organization establishes the business stance on broad issues of trade and investment policy as well as on vital technical or sectoral subjects including financial services, information technology, telecommunication, marketing, environment, transportation and etc., a vital role can be played in articulating the need for improving productivity. do it now. this will be a major contribution that you make to our country.