Consumer prices rise in February; core inflation at 33-mth high

REUTERS: Sri Lanka’s consumer prices in February rose 2.7 percent from a year earlier, accelerating from the previous month’s 0.9 percent, data from the Department of Census and Statistics showed yesterday.

Annual core inflation hit a 33-month high of 5.7 percent year-on-year. Core annual inflation, which excludes fresh food, energy, transport, rice and coconuts, edged up to 5.7 percent from 4.6 percent in January. It hit a record low of 0.8 percent in February 2015.

Softlogic Stockbrokers Research Head Danushka Samarasinghe said the inflation rate will start to pick up with the rise in interest rates and strengthening of the dollar globally. “Rising cost of funds and the input cost will push the consumer prices higher. We have not yet seen the production cost increase passed on to the consumers,” he said. On a month-on-month basis, the Colombo Consumer Price Index (CCPI) fell 0.6 percent. In January, it fell 0.2 percent, slowing for the third straight month from a 10-month high of 1.4 percent in November

February inflation, as measured on a 12-month moving average basis, was 0.9 percent, rising from January’s 0.7 percent. The rupee has been on the decline and interest rates have been on the rise as the Central Bank has changed its easy monetary policy stance to hawkish since December.