Inflation declined for the third straight month in September 2008 to 24.3% from 24.9% recorded last month. The general price level for items in the Colombo Consumers' Price Index (CCPI) increased marginally in September 2008 compared to the prices the previous month.

According to the Department of Census and Statistics (DCS) which issued a press release, this is a continuation of the positive trend since March with the exception of last month. The CCPI for all items for September 2008 was 207.2, revealing an increase of 0.9 index point change or 0.4% from the August 2008 index which was 206.3. The increase represents Rs.166.61 in the expenditure value of the 'Market Basket.'

The food and non alcoholic beverages group index witnessed a 0.2% Month on Month (MoM) decline in September. On average, the press release stated that expenditure on food and non alcoholic beverage basket decreased by Rs.55.88. Increased supply of domestic agricultural produce, mostly varieties of vegetables, coconut, coconut oil, chicken, fish and seafood contributed towards the deceleration of the food group in September. However, prices of Samba varieties and sugar recorded increases.

Of the total increase of 0.4%, the DCS stated that food items account for a decrease of 0.2 percent, mainly due to vegetables (-0.1%), coconuts (-0.1%) and coconut oil (-0.1%). Statistics show that there was an increase of 0.3%, 0.1% and 0.1% in the housing, water, electricity gas and other fuels group, the transport group and the recreation and culture group respectively.

On a year to year basis, the highest contribution to the overall increase of around 57% came from food commodities which rose by 14% in September 2008. The combined effects of both domestically produced and imported food commodities contributed to the increase in the food sub index. Among the food commodities, rice, vegetables, dhal, milk powder, coconuts and coconut oil which have significant weights in the CCPI basket recorded price increases on a year to year basis.

The DCS stated that the price of bread and wheat flour also rose by 39% year on year basis due to high import prices of wheat grain in the world market. Under the non food category, the prices of kerosene oil, petrol, diesel and gas rose by 18%, 34%, 47% and 44% respectively due to high prices in the world market.