The headline inflation measured by the National Consumer Price Index (NCPI) rose by a sharp 8.1 percent in the 12 months to February 2020, from 7.6 percent in January, as the food prices spiked and the base effects kicked in.
This is the highest headline national inflation recorded since 2017 November, when the price increase hit 8.4 percent.
“This was driven by statistical effect of the low base prevailed in February 2019. Further, food inflation (YoY) stood at 16.3 percent in February 2020, while non-food inflation (YoY) recorded at 2.1 percent,” a statement issued by the Central Bank said.
However, on a month-on-month (MoM) basis, the prices stayed flat, as the January prices too stayed elevated, starting from around December last year.
The rise in national inflation in February followed a similar pattern as the Colombo Consumer Price Index (CCPI) measured inflation, which hit 6.2 percent, up from 5.7 percent in January, due to the same reasons.
Despite food inflation, the prices of vegetables and rice remained muted in February, from a month ago, the statement added.
As a result, the underlying inflation of the economy, as referred to as core inflation, measured barring the impacts from the food and energy, which are identified as often price-volatile items, has continued its downward trend to record a growth of 3.4 percent from a year ago, down from 3.9 percent in January.
The core prices based on the CCPI inflation, a commonly used gauge by the policymakers in determining the general trajectory of prices and the setting policy rates, however showed an uptick in February, with a growth of 3.2 percent, up from 3.0 percent in January.
The Monetary Board last week cut the key policy rates by 25 basis points, in the fight against the economic fallout of the coronavirus pandemic, while downplaying its forward inflation expectation.
However, as people rush to buy their staples due to the prolonged curfew in a bid to stem the spread of the virus, many traders, both big and small, were found charging exorbitant prices and were openly flouting the maximum prices gazetted by the government last week, exploiting the hapless consumer at this much-needed hour.
Some traders were found hiding stocks of dhal and tinned fish, which were imposed with maximum retail prices by the government.
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