CB on inflation in January 2011

Inflation, as measured by the Colombo Consumers’ Price Index (CCPI) (2002=100), computed by the Department of Census and Statistics, decreased to 6.8 per cent in January 2011, on a year-on-year basis, from 6.9 per cent in December 2010, mainly due to the base effect.

Meanwhile, annual average inflation increased to 6.0 per cent in January from 5.9 per cent in the previous month, as a result of the price developments in the preceding 12 month period.

The core inflation, which measures the price movement of non-food and non-energy items of the CCPI basket, decreased to 3.6 per cent on a year-on-year basis and 6.0 per cent on an annual average basis in January 2011 from that of 5.6 per cent and 6.3 per cent respectively, in December 2010.

The contribution to the monthly increase of 1.3 per cent in the Index came mainly from price increases in the sub category of Food and non-alcoholic beverages (2.1 per cent). Within the Food sub category price increases were registered for vegetables, fruits, coconut, coconut oil, red onions and fish and sea food, primarily led by the supply shortages resulted from heavy rains.

However, prices of rice, eggs, chicken, big onions and sugar declined. Further, price increases were recorded in the sub categories of Clothing and footwear (2.1 per cent); Education (1.6 per cent); Health (0.3 per cent); Furnishing, household equipment and routine household maintenance (0.1 per cent); and Miscellaneous goods and services (0.9 per cent).

A marginal increase was also observed in the sub category of Housing, water, electricity, gas and other fuels due to upward revision in the price of gas. Meanwhile prices in the sub categories of Recreation and culture; Transport; and Communication remained unchanged during the month.