Inflation decelerates in August says Central Bank

Inflation, as measured by the Colombo Consumers’ Price Index (CCPI) (2006/07=100) computed by the Department of Census and Statistics, declined to 9.5% in August 2012 on a year-on-year (YoY) basis from 9.8% in the previous month, mainly due to the price decreases in the food category. However, the annual average inflation rate rose to 6.3% in August 2012 from 6.0% in July 2012.

Meanwhile, core inflation decreased to 5.9% in August 2012 on a YoY basis, from 6.0% in July 2012, while it followed the same trend and reached 5.4% on an annual average basis from 5.5% in the previous month.

The CCPI declined by 0.6% in August 2012 over the previous month, with the Index decreasing in absolute terms to 165.7 from 166.7 in July 2012. The contribution to the monthly decrease in the Index came mainly from price decreases in the Food and Non-Alcoholic Beverages category (by 1.1%). The decrease in the prices of vegetables, fish and sea food, coconuts, coconut oil, potatoes, big onions, red onions, green chillies, eggs and milk powder contributed to the decrease in the food category of CCPI. However, an increase in the prices of rice, sugar, fruits and limes was reported during the month. Within the non-food category, prices increased in the sub-categories of clothing and footwear (by 0.2%); furnishing, household equipment and routine household maintenance (by 0.2%); and recreation and culture (by 0.1%). However, prices in the subcategory of housing, water, electricity, gas and other fuels recorded a decline of 0.7% due to the reduction in the price of LP gas w.e.f. 14 July 2012.

Meanwhile, the prices in the sub-categories of health; transport; communication; education; and miscellaneous goods and services remained unchanged during the month.