Sri Lanka point-to-point inflation eases, but still at 10-year highs

L to R: Samantha Ranatunga, Chairman, HVA Foods PLC; Jan Müggenburg, Chief Executive Officer, Müggenburg Group; Graham Stork, Chief Executive Officer, HVA Foods PLC; Sarva Ameresekere, Group Chairman, George Steuart & Co. Ltd.

February, 28 (LBO) – Consumer prices in Sri Lanka's capital Colombo fell 1.3 percent in the month of February easing 12-month inflation to 19.2 percent from 20.5 percent a month ago, the government statistics office said. The Colombo Consumer Price Index, the most widely watched index in the country, fell to 5116 points from 5184 points in January.

But the moving average of the index which smoothens out seasonal fluctuations continued to move up to 15.8 percent from 14.8 percent a month ago.

"These price decreases can be mainly attributed to higher supply of locally produced agricultural consumer goods, specially the vegetables to the main markets in Colombo City due to seasonality," the Department of Census and Statistics said.

Sri Lanka's inflation rose in from April 2006 due to heavy money printing to finance the budget.

But the central bank has pledged to limit money printing in 2007 and tightened monetary policy in December.

Last week the central bank raised policy rates by 50 basis points. At today's treasury bill action rates edged up by 21 basis points as the monetary authorities kept off purchasing bills.

Authorities are expecting inflation to ease over the next two months.

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