CB explains why inflation rose in May

Inflation, as measured by the Colombo Consumers’ Price Index (CCPI) (2006/07=100) and computed by the Department of Census and Statistics, increased to 7.3% on a year-on-year basis in May 2013 from 6.4% in the previous month. The inflation rate on an annual average basis remained unchanged at 8.8% in May 2013 as recorded in the previous two months.

Core inflation on a year-on-year basis decreased to 5.7% in May 2013 from 6.1% in the previous month while it increased marginally on an annual average basis to 6.6% in May 2013 from 6.5% in April 2013.

The CCPI increased by 2.3% in May 2013 over the previous month, with the index increasing in absolute terms to 173.9 from 170 in April 2013.

The contribution to the monthly increase in the index came mainly from price increases in the Non-Food category by 3.7%. Within the Non-Food category, prices increased in the sub-categories of Housing, Water, Electricity, Gas and Other Fuels (by 9.9%); Recreation and Culture (by 2.7%); Miscellaneous Goods and Services (by 0.4%); Education (by 0.2%); Clothing and Footwear (by 0.1%); and Furnishing, Household Equipment and Routine Household Maintenance (by 0.1%).

The increase in the sub category of Housing, Water, Electricity, Gas and Other Fuels was totally due to the impact of the upward revision in the electricity charges with effect from 20 April 2013. Meanwhile, the prices in the sub-categories of Health, Transport and Communication were unchanged during the month.

Further, the prices in the Food and Non Alcoholic Beverages sub-category also recorded an increase of 0.6% in May. The price of most varieties of vegetables, fresh fish, chicken, red onions, limes and milk powder increased during the month. However, a decrease in the prices of some varieties of fruits, eggs, big onions and sugar was reported.