Basic food prices eased and non-food prices rose in March, nudging the Colombo Consumer Price Index (CCPI) up 4.3 percent during March from a year ago, from 4.0 percent in February.
The CCPI is the closely watched gauge for price behaviour in the Sri Lankan economy. In recent times the prices have moderated to mid-single digits due to easing of food prices giving wiggle room for the Monetary Board to stay pat.
But upward pressure on prices came from the non-food items during March mainly due to once-a-month revision of fuel prices and sharp increase in prices of alcoholic beverages and cigarettes. The food price index, which tracks a basket of items ranging from rice to poultry to vegetables and fruits to spices, fell by 1.6 percent from February prices, continuing a trend that began in October 2018.
The prices of rice increased sharply from a month ago, followed by price of chicken and a few varieties of fruit and spices.
Vegetable prices declined sharply pulling down the entire food sub-index with the price of coconuts, big onions and sea fish following suit.
Conversely, non-food prices rose by 0.4 percent in March from February prices with none of the sub-sectors showing a decline in prices during the month.
The biggest impact came from alcoholic beverages, cigarettes and narcotic sub-index, which rose by almost 30 percent in prices followed by the increase of duties on such products by the budget announced in March.
Meanwhile, the transport sub-sector also rose followed by back-to-back price increases in petrol and diesel during February and March.
The health sub-sector also rose, caused by the purchase of medical and pharmacy related products.
Healthcare cost is becoming a significant part of the modern consumer’s expenditure basket as the State sector healthcare is not capable of coping up with the demand for free medicare.
The rising non-communicable diseases, lack of exercises and bad food habits have caused people to spend more on medicare, for which the State has limited resources. Meanwhile, prices of housing, electricity, water, gas and other fuels rose during March albeit slowly, and it is yet to be seen how the ongoing power interruptions could impact this sub-sector.
The core inflation measured barring the impact of largely volatile items such as fuel and energy rose 5.6 percent in March, up from 5.4 percent in February.
The Monetary Board in February held the key rates in its first meeting for the year, as they did not foresee an imminent threat from prices in the medium term.