In Night, why did the inmate tell Elie and his father to lie about their ages?

Part of the Nazis' "selection" process was to weed out people who could not physically contribute to the German cause.  So, if a prisoner was too young (Elie's case) or too old (Elie's father's situation) to be of any value in regards to labor, he/she was sent directly to the gas chambers or other means of death (mass shootings, etc.).  The inmate's advice to Elie is the first step in Elie's being forced to think constantly of self-preservation.  As such a religious young man, lying would not have been in keeping with Elie's Cabbalist doctrine, but early on during his Holocaust experience, he has to choose between his religious faith and survival.  As Elie constantly chooses survival through the memoir, he gradually loses his faith.

One other note--the selections were not based solely on age.  Women who had just given birth were often "exterminated" immediately because the Nazis knew that they would not willingly give up their babies. People who were handicapped or plagued with disease or illness were also murdered upon their arrival at the death camps.  This selection process is a standard part of genocide.  Those in power know that they must dehumanize their victims; so to put people through a physical selection process where they are valued solely for their labor potential is to equate a person with cattle sold at auction.