Oct. inflation drops to 5.5% on reduced food prices

Tuesday, 24 November 2020 01:44 - - {{hitsCtrl.values.hits}}

Inflation in October reached 5.5%, down slightly from 6.4% in the previous month, the Census and Statistics Department said, putting it largely down to changes in food prices.

Contributions to the inflation rate for October from food groups and non-food groups are 4.6% and 0.8% respectively, whilst contributions of food and non-food groups to inflation in October 2019 were 3.2% and 2.4% respectively, resulting in a headline inflation of 5.6%.

With respect to October 2019, the reported increase in percentage of food groups was mainly due to higher price levels prevalent in October 2020, particularly prices of coconuts, rice, turmeric powder, coconut oil and sugar.

Comparing the month-on-month changes, the NCPI in October has increased to 139.1 from 138.9 reported in September. This shows an increase of 0.2 index points or 0.1%. The month-on-month change was contributed to by increases in the index values of food items by 0.14% and non-food items by 0.02% respectively.

Price increases of food items were reported for big onions, rice, red onions, coconuts, masoor dhal, green chilies, dried chilies, potatoes, turmeric powder and garlic. However, decreases in index values were reported for fresh fruits, fresh fish, eggs, vegetables, chicken and sugar.

The increases in index values of non-food groups in October compared to the previous month was due to the price increases in groups of items ‘Housing, Water, Electricity, Gas and Other fuels’ (Materials for the maintenance), ‘Furnishing, Household equipment Routine household maintenance’ and ‘Miscellaneous Goods and Services’.

However, price decreases in groups of items were reported for ‘Alcoholic Beverages, Tobacco & Narcotics’ (Arecanuts). Further, very slight price increases were reported in groups of ‘Clothing and Footwear’, ‘Recreation and Culture’ and ‘Restaurants and Hotels’ compared to the preceding month.

Meanwhile, the price indices of ‘Health’, ‘Transport’, ‘Communication’ and ‘Education’ groups remained unchanged during the month.

Core inflation, which reflects the underlying inflation by excluding volatile items of food, energy and transport groups in the economy as measured by the Year-on-Year change based on NCPI for the month of October has declined to 4.5% from 4.8% in September 2020.