Sri Lanka’s annual inflation surges to 12.1 % in December 2021

Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI), rose sharply to 12.1 per cent in December 2021 from 9.9 per cent in November 2021.

On an annual average basis, the CCPI increased to 6.0 per cent in December 2021 from 5.3 per cent in November 2021, the Central Bank said in a media release.

An in-depth analysis of the key drivers of current inflation suggests that a large component of inflation is driven by supply side factors.

“A detailed explanation in this regard will be published by the Central Bank shortly. Inflation was driven by monthly increases of prices of items in both Food and Non-food categories,” the release said.

Subsequently, Food inflation (Y-o-Y) increased to 22.1 per cent in December 2021 from 17.5 per cent in November 2021, while Non-food inflation (Y-o-Y) increased to 7.5 per cent in December 2021 from 6.4 per cent in November 2021.

The monthly change of the CCPI was recorded at 2.64 per cent in December 2021 due to price increases observed in items of both Food and Non-food categories which were 1.80 per cent and 0.84 per cent, respectively.

Accordingly, within the Food category, prominent increases were observed in prices of vegetables, fresh fish, and green chillies. Further, prices of items in the Non-Food category recorded increases mainly due to price increases observed in the Restaurants and Hotels, Transport (Petrol, Diesel, Taxi/three-wheeler charges) and Alcoholic Beverages and Tobacco (Arrack, Cigarettes) sub-categories during the month.

The core inflation (Y-o-Y), which reflects the underlying inflation in the economy, increased to 8.3 per cent in December 2021 from 7 per cent in November 2021. Moreover, annual average core inflation increased to 4.4 per cent in December 2021 from 4.0 per cent in November 2021.