Higher food prices, medical expenses keep November inflation at elevated levels

Sri Lankans’ medical spending has spiked in November, pushing up the overall consumer prices for the month, perhaps a sign that the profusely higher food prices have either shocked them to the core or the cut down in their daily food nutritional intake has made them sick. 

In November, Sri Lanka’s headline inflation, measured by the Colombo Consumer Price Index (CCPI), the key index used to gauge the direction of the consumer prices, rose by 7.6 percent from a year earlier. 

Although this is a slight deceleration from the 7.8 percent in October, this still remains the second highest since the base year of the CCPI was changed in January 2015. 

Sri Lanka is plagued with galloping food inflation and chronic food shortages due to the continuous policy blunders and natural disasters. 

As a result, Sri Lanka has been depending on imports even for staples such as rice, which in turn has expanded the country’s trade gap and further destabilised the fragile external sector. 

The politicians seeking re-election further distort the situation by way of imposing price floors on certain goods, making matters worse for the people as such moves create shortages in the market place.

Sri Lanka’s food prices, although not as bad as those in hyper-inflationary countries such as Zimbabwe and Venezuela, are still perhaps among the highest in the world. 

In an unprecedented development, all four rainy seasons of the country failed, affecting the three cultivating seasons. 

Sri Lanka needs 196,000 metric tonnes of rice to feed its people monthly and the agricultural scientists forecast the requirement will rise by 18 percent by 2020. 
In the Global Food Security Index 2017, Sri Lanka slipped one notch compared to last year, to the 66th spot out of 113 countries, which showed that the country immediately needs to address its food security issues.  

Meanwhile, the rise in prices of less volatile items or the so-called core price inflati

on, which doesn’t take into account the impact of food and energy, rose by 5.2 percent in November from a year ago but easing from 5.8 percent in October. 
From October to November, the prices of many essential items such as rice, coconut and vegetable rose outstripping the declines in the prices of fish and some varieties of fruit. 

Sri Lanka slashed the prices of some essential commodities in a pre-budget bonanza announced on the eve of the budget speech but these have had only a limited impact in easing the overall price pressures.  

Meanwhile, the most notable development in November was the sudden spike in the medical expenses, which rose by 0.37 percent on a month-on-month basis. 
The Census and Statistics Department attributed this to higher expenses made to the medical laboratories. 

Further, the prices of alcoholic beverages, restaurants and hotels have also seen an increase, perhaps an indication of the frustrated masses seeking refuge in alcoholic spirits to relive the stress imposed upon them by the ruling classes. 

With coconut prices remaining over Rs.100 a nut and a kilogramme of rice being sold in excess of Rs.100, Sri Lankans are preparing to celebrate perhaps their most difficult Christmas and have no real reason to welcome 2018 with much fanfare, given the country’s volatile political and economic climate.