Inflation eases in March; non-food category rise persist

Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI) decreased to 50.3% in March from 50.6% in February.

In February, CCPI dip was better in comparison to 51.7% in January.

However the Central Bank said the decline in the headline inflation in February was broadly in line with the disinflation path it envisaged in 2023.

The Food inflation (Y-o-Y) decreased to 47.6% in March from 54.4% in February, whereas the Non-Food inflation (Y-o-Y) increased to 51.7% in March from 48.8% in February. Monthly change of CCPI recorded at 2.92% in March due to price increases observed in items of Non-Food category, which was 3.71%.  In February too Non-Food inflation (Y-o-Y) rose in comparison to from 47.9% in January. The Food category recorded a monthly decline of 0.79% in March.

The core inflation (Y-o-Y), which reflects the underlying inflation in the economy, decreased to 39.1% in March from 43.6% in February.

Looking ahead, Central Bank said based on the available information, the anticipated declining trend of inflation is expected to continue through 2023.

This disinflation process would be supported by subdued demand conditions owing to tight monetary and fiscal policy measures, softening of food and energy prices amidst the recent exchange rate appreciation and greater pass-through of lower global commodity prices, second round impacts of recent fuel price revisions and anticipated improvements in domestic supply conditions, along with the favourable statistical base effect.