Inflation in Feb. drops to 2.7% led by low food prices

Inflation, as measured by the Colombo Consumers’ Price Index (CCPI) (2006/07=100) computed by the Department of Census and Statistics, has declined on a year-on-year basis from 3.8% in January 2012 to 2.7% in February, which is the lowest rate since January 2010.

The Central Bank said the annual average inflation also decreased to 6.1% in February from 6.5% in the previous month, for the fifth consecutive month. In addition, the annual average core inflation continued to decrease to 6.6% as compared to that of January 2012, while the core inflation on YoY basis remained at 4.7% in February 2012. Meanwhile, the general price level as indicated by the monthly index recorded a marginal increase of 0.4% in February 2012 over that of the previous month, with the index increasing in absolute terms to 155.4 from 154.8.

The increase in the index was entirely due to the upward price revision of petrol, diesel and kerosene, bus fares and surcharge on electricity bill in mid February 2012 which had a partial impact on the CCPI. Though the sub indices of the Transport (4.6%); and Housing, water, electricity, gas and other fuels (1.8%) increased during the month, the impact on the index was off-set by the substantial decrease in the Food sub index. Improved domestic supply mainly contributed to decrease the sub category of Food and non-alcoholic beverages by 1.3%. More specifically, decline in prices of most varieties of vegetables and fish, rice, red onion, big onion, potato, eggs, limes and green chillies contributed towards the decrease in the sub index.Further, prices in the sub categories of Clothing and footwear (0.9%); Furnishing, household equipment and routine household maintenance (0.2%); Recreation and culture (0.3%); and Miscellaneous goods and services (0.2%) increased during the month. However, Health, Communication and Education sub categories remained unchanged during the month.