Inflation rises to 1.7% in October

The Colombo Consumer Price Index (CCPI) rose 1.7% on slightly higher food prices in the 12 month to October 2015, up from a negative of 0.3% last month, ending two months of falling prices triggered by reduced fuel costs. 

CCPI gained 0.7 points to 182.1 points, according to data released by the Census and Statistics Department. 

The index point increased by 0.38% and this was due to the increase of food items by 0.39% and decrease of non‐food items by 0.01% respectively.

“Significant increase in value changes in index were reported for vegetables (0.11%), sugar (0.08%), rice (0.05%), limes (0.04%), mangoes (0.04%), green chillies (0.03%), chili powder (0.03%), beef (0.02%), fresh fish (0.02%) and dried fish (0.02%) contributed to the rise of consumer prices,” data said. 

However, this was balanced by contribution of non food items, which continued to decrease marginally at 0.01%. Price decrease was reported for ‘Clothing and Footwear’ (0.02%) and ‘Housing, Water, Electricity, Gas and Other fuel’ that showed a slight price increase mainly due to the increase of fire wood price.  

The price index which was at 183.2 points in January fell sharply by 2.3% in February after the Government cut prices of several traded goods including fuel. Though the index gained steadily since then, except for the last two months, but 12-month inflation was low or negative due to one-off effect.

Year-on-year inflation of 1.7% was reported for the month of October 2015, after consecutive three months (July‐September) of deflation. This was mainly due to elimination of effect of reduced electricity bills and recent price increases of certain food items. Electricity was the main contributor to deflation experienced during previous three months. Electricity contributed ‐1.3 % to the inflation rate.

YoY inflation of Food Group has increased from 2.0% in September 2015 to 2.7 % in October 2015 while Non‐food Group increased from ‐2.2% to 0.8%

Sri Lanka rupee also fell sharply over September, but global commodity prices were flat and falling with a strong US dollar. Sri Lanka is facing balance of payments pressure with a recovery in domestic credit, and monetisation of debt.

Concerns have been raised over core-inflation, which is made up mostly of non-traded items. Core inflation rose to 4.4% from 4.2% a month earlier.