High food prices resulted in Sri Lanka’s countrywide inflation shooting up to 8.8 percent in October, the highest so far this year, according to the National Consumer Price Index (NCPI) compiled by the Department of Census and Statistics (DCS).
“On year-on-year basis, contribution of food commodities to inflation was 6.44 percent in October 2017 compared to that of October 2016. Contribution of non-food items was 2.41 percent,” DCS said.
Due to a severe drought which disrupted agriculture supply chains, food prices increased and Sri Lanka had to import significant foodstuff from overseas.
The biggest contribution to year-on-year (YoY) inflation was higher coconut, vegetable and rice prices. Food prices increased by 14.7 percent YoY in October while non-food prices increased by just 4.3 percent YoY. The month-on-month NCPI increased by 1.2 percent from September, with food items contributing 1.12 percent, and other items contributing 0.8 percent.
Once more, higher coconut, vegetable and rice prices contributed to the increased price levels in the market.
The agricultural zones are now receiving rainfall. Ratings agency S&P this week said that inflation is expected to moderate as conditions are expected to return to normalcy by next year.
The harvest from the main agricultural season is expected to hit the market in the first calendar quarter of 2018.
Both the Central Bank and the Finance Ministry are expecting mid-single digit inflation in 2018.