Colombo consumer prices fall 4.0% in deepening deflation

• Central Bank expects further deepening in near-term prices from recent cuts to electricity tariffs before turning positive

The consumer prices in the Colombo district fell 4.0 percent in the 12 months through January 2025, compared to the 1.7 percent decline in the prices in December 2024. 
This further deepened the months-long deflation, which managed to take away at least a little part of the painfully high price pressures the people had to endure until recently.
January also marked the fifth consecutive month of negative prices, when the current stretch of deflation set off in September last year, largely led by the repeated cuts to the fuel prices and electricity and water tariffs.
Measured on a monthly basis however, the prices in January came in at 0.5 percent higher, decelerating from the 1.2 percent increase in December 2024.
The faster decline in the January consumer prices came even before any impact from the recently cut electricity tariffs being encapsulated into the price indices.
The Central Bank this week said it expects the current stretch of deflation to further deepen in the near term, due to the electricity tariff cut, before turning positive from the second quarter of this year.

Thereafter, it expects the headline inflation to converge to its medium-term target of 5.0 percent in the back half of the year.
Meanwhile, the annual food prices fell 2.6 percent in January 2025, compared to the 0.8 percent increase seen through December 2024.
The monthly prices rose by 0.3 percent, decelerating from 3.9 percent in December 2024, as the prices of many food staples rose, led by coconut, green chilies and rice. The non-food prices meanwhile fell 4.7 percent in January from a year ago levels, compared to the 3.0 percent decline through December 2024.
However, on a monthly basis, the prices started rising by 0.6 percent, turning from a negative 0.1 percent in December 2024, as many categories under non-food saw the prices rising, led by transport and education, followed by healthcare spending.
Meanwhile, the so-called core-prices, measured barring the often-volatile items such as food, energy and transport, rose by 1.2 percent, decelerating from 2.7 percent through December 2024, reflecting easing underlying prices in the economy.