Core inflation up in July; single digit sustained so far in 2014

Friday, 1 August 2014 00:28 - - {{hitsCtrl.values.hits}}

Central Bank said yesterday inflation, based on the change in the Colombo Consumers’ Price Index (CCPI) (2006/07=100), which is computed by the Department of Census and Statistics, moderated further to 4.7% in July 2014 from 4.9% in June 2014, on an annual average basis, declining for the fourteenth consecutive month. The year-on-year (YoY) inflation has been maintained within benign single digit levels so far in 2014, although it increased to 3.6% in July 2014 from 2.8% in a month earlier, as a result of price increase of food items. Core inflation, which is responsive to changes in aggregate demand, increased slightly in July 2014 compared to the previous month. Accordingly, core inflation, on a YoY and annual average basis, increased to 3.7% and 3.1%, respectively, in July 2014 from 3.5% and 3.0%, respectively, in June 2014. Central Bank said overall, stable prices of items in the Non-food category contributed inflation to be contained at a low level in July 2014.

Within this category, prices of items in the sub group of Housing, Water, Electricity, Gas and other Fuels declined while that of Miscellaneous Goods and Services increased. Prices in all the other sub groups, namely, Clothing and Footwear; Furnishing, Household Equipment and Routine Household Maintenance; Health; Transport; Communication; Recreation and Culture; and Education remained unchanged during July 2014, compared to the previous month. The increase in prices of items in the Food and Non-alcoholic beverages sub-category was the main contributor to the monthly increase (1.0%) in the CCPI. Within the Food category, drought conditions prevailed in main producing areas caused average prices of many varieties of vegetables to increase during the month. Due to the seasonal factors, prices of many fresh fish and dried fish varieties, eggs, big onions and green chilies also increased. Nevertheless, prices of several varieties of fruits declined.