November inflation rises to 10-month high of 3.1%

3 December 2015 02:36 am - 0     - {{hitsCtrl.values.hits}}

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The headline inflation for the 12 months to November 2015 rose by 3.1 percent, recording the highest increase in 10 months, the data released by the Census and Statistics Department showed. 

Inflation in November has predominantly been fuelled by the rising food prices but the non-food prices too showed an increase. 

Food inflation in the month of November virtually doubled to 5.2 percent from 2.7 percent a month before, while the non-food inflation rose by 0.3 percentage points to 1.1 percent. 

The benchmark Colombo Consumer Price Index (CCPI) rose by 2.6 index points or 1.43 percent to 184.7 in November. 

Sri Lanka in October ended three months of deflation by recording a 1.7 percent rise in the prices. 

Meanwhile, the core-inflation, which excludes fresh food, energy, transport, rice and coconut, which were on a continuous upward path, edged down to 4.3 percent from 4.4 percent in October. 

Sri Lanka’s loose monetary policy, which creates cheaper credit, and the weakening rupee, which makes imports expensive, could cause economic overheating. 

Sri Lanka’s headline inflation had been hovering close to lower single digits before falling into deflation in July 2015, due to the removal of taxes from essential commodities and cutting of the prices of administered goods such as energy from the interim Budget presented in January. 

However, the prices started to rise from October due to the gradual demand fuelled by the public sector wage increase, cheaper bank credit and supply disruption in key commodities such as vegetables, due to bad weather. 

With the seasonal demand too kicking in, the inflation could further increase in December.  

Sri Lanka’s ill-though-out price controls also create black markets driving prices further up. 

The Census and Statistics Department recently issued a ‘National Consumer Price Index’, covering all provinces in the country. According to the index released in November for the first time, headline inflation has been at 3 percent in October on a year-on-year basis, broadly in line with the CCPI.  
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