Business Times

Inflation remained at single digit level in 2011:CB

Inflation in Sri Lanka, measured by the Colombo Consumers' Price Index (CCPI), maintained a single digit level in 2011, reaching 6.7 % in December, the Central Bank (CB) said. The year-on-year core inflation, which is computed by excluding the items of fresh food, energy, transport, rice and coconut from the CCPI basket, also declined reaching 4.7 % in December. The annual average core inflation reached 6.9 % by the year-end.

The contribution to the annual average increase of 6.7 % in the index came mainly from price increases in the sub category of Food and non alcoholic beverages (8.8 %). Average prices in the sub categories of housing, water, electricity, gas and other fuels (4.3 %), transport (7.1 %), clothing & footwear (13.4 %), furnishing, household equipment and routine household maintenance (4.6 %), health (2.7 %), education (3.5 %), miscellaneous goods & services (3.9 %), and recreation & culture (5.5 %) increased compared to the previous year. However, the prices in the sub category of communication remained unchanged during the year, the CB said.

The increase in prices of imported food commodities such as wheat flour and milk powder in the international market led to the increase in the food sub index and thereby the CCPI. Further, the upward price revisions of diesel, petrol, kerosene, LP gas and bus fares effected during the reference period also contributed both directly and indirectly to inflation.

The average price of rice was lower in 2011 against 2010, despite a sharp drop in production in the Maha season. Although the prices of almost all varieties of rice recorded marginal increases during February and March 2011, prices began to decline subsequently due to availability of sufficient stocks in the market with a bumper Yala harvest. However, a gradual increase in the price of rice has been observed since October, the Bank said. The upward price revisions of fuel and LP gas on several occasions during the year also had an impact on the CCPI both directly and indirectly.

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