November annual inflation eases to 4.7%

Thursday, 1 December 2011 00:00 -     - {{hitsCtrl.values.hits}}

  •  Annual inflation slows despite all analysts expected rise
  • Cenbank says better supply offset impact of fuel price hike
  • Analysts wary of government’s inflation data

By Shihar Aneez

COLOMBO (Reuters): Sri Lanka’s annual inflation slowed to a 16-month low of 4.7 percent in November from a year earlier, contrary to expectations of a rise due to fuel price, which the central bank said was offset by falling food prices.

Annual inflation slowed from 5.1 percent in October on a new consumer price index, official data showed on Wednesday, though the market was expecting a higher figure than the prior month, after the government increased fuel prices by around 10 percent on Oct. 30.

“We saw low food prices in the first two weeks of this month and that would have offset the impact of the fuel price hike,” Central Bank Chief Economist K.D. Ranasinghe told Reuters. “Still we see a risk of high inflation due to the rupee devaluation.”

The central bank implemented the 3 percent devaluation after President Mahinda Rajapaksa, in his capacity as the finance minister, ordered it during his 2012 budget presentation on Nov. 21.

A Reuters poll by 10 analysts had expected annual inflation to rise to 5.3 percent and annual average inflation to slow to 7 percent.

“I don’t know if the government compiles the inflation data using a shop which doesn’t sell goods to people,” an economist told Reuters on condition of anonymity.

“If you carefully analyse, prices of almost all goods have risen and are still being increased and the cost-of-living burden has been on the rise. But we don’t see that reflected in the index.”

Annual average inflation, measured by a 12-month moving average, slowed to 6.9 percent this month, from October’s 7.1 percent.

The Department of Census and Statistics in June introduced a new index based on a 2006/2007 survey, replacing an earlier one that had 2002 as a base year.

The opposition accused the government of manipulating the basket of goods used to compile inflation data to lessen the impact of the most price-sensitive sectors, mainly energy.