Countrywide consumer prices up 2.2% in March

Sri Lanka’s inflation of all provinces rose 2.2 percent in March 2016 from a year ago, rising from 1.7 percent in February 2016 as food prices in the market basket rose, the Census and Statistics Department data showed.

The newly compiled National Consumer Price Index (NCPI) has continuously been on an increasing path since January 2016. On a year-on-year basis, food prices in the new National Consumer Price Index (NCPI) rose by 0.5 percent against the -0.6 percent in February while the non-food inflation was 3.5 percent in March, slowing from 3.7 percent in February.

“This increase of inflation in March 2016 was mainly due to 0.22 percent of price increase in food commodities,” said the Census and Statistics Department. But the contribution to the year-on-year inflation from food commodities was 0.22 percent in March while the non-food items contributed 1.99 percent.

The NCPI is compiled covering all nine provinces, takes 407 items in to the market basket and is based on the Household Income and Expenditure Survey (HIES) conduced as recent as 2012/13 which is more reflective of the changes in the prices in the economy than the Colombo Consumer Price Index (CCPI) which has the base period of 2006/7. The CCPI in March 2016 rose 2 percent year-on-year but the core inflation – the underlying inflation of an economy – rose by 4.5 percent after hitting a high of 5.7 percent in February.

The Central Bank is worried of the pace at which the coreinflation is rising and said the core-inflation above 5 percent is high. “We don’t want the inflation to exceed 5 percent. Core inflation at 5.7 percent, we can’t take things for granted,” the Central Bank Governor Arjuna Mahendran told a recent media briefing.

The inflation based on NCPI on a month-on-month basis fell 0.7 percent due to 0.73 percent decrease in the value of food and non-alcoholic beverages and the increase in value of non-food items by 0.07 percent. “Prices of vegetables, rice, green chilies, coconuts and red onions decreased during the month. Prices in Alcoholic Beverages and Tobacco sub group increased during the month,” the statement released from the Statistics Department said. The annual average inflation based on NCPI slowed to 2.4 percent in March 2016 from 2.6 percent a month ago.