May inflation likely to accelerate due to power prices: Official

Saturday, 20 April 2013 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lanka’s annual inflation in May is likely to accelerate compared to April’s on-year pace, as the effect of higher electricity tariffs feeds through the broader economy, an official at the State-run Statistics Department said

on Friday.

The country’s Public Utilities Commission approved a sharp hike in tariffs on Wednesday as part of reforms to reduce losses in State-run power firms.

“There will be a 1.7% rise in the annual inflation next month from the April figure only due to the increase in the electricity prices,” D.C.A. Gunawardena, the Head of the Department of Census and Statistics told Reuters.

“Since the price revision will take place with effect from later this month, we hardly see any impact for this month. But we will also see second round effect of this power price increase gradually.”

Inflation in April is expected to be slightly higher than 7.5% compared to last year, Gunawardena said. The data will be released on 30 April.

Electricity accounts for 4.44% of the basket of goods considered for the compilation of the inflation index.

The $ 59 billion economy’s inflation rate is on a falling trend mainly due to a high base effect, the central bank has said. Annual inflation eased to 7.5 percent in March from a near record high of 9.8% the previous month.