National inflation returns to positive in May with 0.6% increase 

The national consumer prices started rising again in May returning the country to a normal course of inflation, effectively ending an eight months spell of price declines. 

The consumer prices measured by the National Consumer Price Index (NCPI) rose by 0.6 percent in May from a year ago, turning from a decline of 0.8 percent through April, predominantly from the accelerating food prices. 

The prices measured on a monthly basis rose by 0.5 percent, picking up from 0.2 percent increase in April. 

NCPI’s return to positive territory in May was a bit earlier than when the Central Bank expected the prices to change course. They expected the prices to start rising on a point-to-point basis from around the early third quarter or from around June. 

But that was based on the Colombo Consumer Price Index (CCPI), the preferred gauge of consumer prices by the Central Bank. 

The Central Bank in May delivered a surprise rate cut of 25 basis points to quicken the pace of prices’ return to positive territory. 

Based on the CCPI, the prices declined by 0.7 percent in May, inching the index closer to an increase, when the next inflation print comes out for June. 

One of the biggest inflation scares, the global oil prices offered some solace yesterday when prices retreated after the tensions between Israel and Iran eased after a truce brokered by the United States (US). Until then the markets were on edge expecting a sharp increase in the oil prices after the US struck three nuclear sites in Iran during the weekend. 

The national food prices in May rose by 5.9 percent, sharply up from 2.9 percent in April. On a monthly basis food prices were up by 1.2 percent, picking up from 0.7 percent a month ago. 

Prices of vegetables, fresh fish, salt and coconuts rose the most during May among others while the prices of green chilies, fresh fruits, big onions, eggs and the likes saw declines. 

The non-food prices continued to decline at 3.4 percent in May, slightly easing from a 3.7 percent decline in April. 

On a monthly basis, the prices fell 0.1 percent, the same pace at which it came down in April on cuts to fuel prices in May. 

Meanwhile, the so-called core prices measured barring the often volatile items such as food, energy and transport rose by 0.3 percent, turning from a negative 0.1 percent through April.