January inflation at near record high

Saturday, 2 February 2013 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lanka’s year-on-year inflation rate in January accelerated to a near record high, Government data showed on Thursday, due to a spike in vegetable prices after floods but the Central Bank said inflation would start to ease after March.

Annual inflation in January hit 9.8 per cent, its highest since January 2009 when it hit a record high of 10.4 per cent year-on-year under a new index.

It gained from 9.2 per cent in December, data released by the Department of Census and Statistics showed.

“This increase is temporary. It is largely due to the increase in vegetable prices due to floods,” Swarna Gunarathne, the Central Bank’s Chief Economist, told Reuters.

Vegetable prices shot up in January following flash floods in December in the island nation’s major cultivation areas.

Gunarathne said annual inflation would remain about nine per cent until the end of the first quarter due to the high food prices.

The Central Bank kept policy rates unchanged on 17 January, saying it expected inflation to moderate soon.

Gunarathne said easing supply shocks and an improved harvest would bring inflation down to the seven per cent range. “So there won’t be any immediate changes to rates,” he said.

Annual average inflation, measured on a 12-month moving average, rose to a record high of 8.1 per cent, from 7.6 per cent in December.