CCPI headline inflation dips in May; core inflation gains

Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index decelerated to 0.9% in May from 1.5% in April. 

Central Bank said this deceleration in the headline inflation is broadly in line with its projections.

Prices of the items in the Food category, on year-on-year basis, remained unchanged in May (i.e., 0.0% Food inflation (Y-o-Y) in May compared to 2.9% in April). Nevertheless, Non-Food inflation (Y-o-Y) accelerated to 1.3% in May from 0.9% in April. 

On a month-on-month basis, inflation continued to decline, CBSL said.

The monthly change of CCPI recorded -0.57% in May due to the price decrease of 0.37% observed in the items of Food category and the price decrease of 0.20% observed in the items of Non-Food category. 

Core inflation (Y-o-Y), which reflects the underlying inflation trends in the economy, accelerated marginally to 3.5% in May from 3.4% in April.

“In the near term, inflation is likely to be below the target level of 5% as per the latest available data, although some upside risks remain. Inflation is expected to align with and remain around the target level over the medium term, supported by appropriate policy measures,” CBSL said.