Inflation declines significantly in November 2013

Monday, 2 December 2013 00:00 - - {{hitsCtrl.values.hits}}

Inflation, as measured by the change in the Colombo Consumers’ Price Index (CCPI) (2006/07=100), computed by the Department of Census and Statistics, declined significantly to 5.6% in November 2013 from 6.7% in October 2013 on a year-on-year (YoY) basis, reaching the lowest level recorded since April 2012.

The sharp deceleration of inflation was a result of the moderation in prices of both food and non-food categories. Annual average inflation moderated to 7.3% in November 2013 from 7.6% in the previous month, declining for the sixth consecutive month. Meanwhile, reflecting well contained demand pressures on prices, core inflation continued to decelerate to 2.4%, year-on-year in November 2013, recording a new low since its introduction in 2007. The continued low level of core inflation is a result of prudent monetary management by the Central Bank, which supports favourable inflation expectations, thus enabling the economy to avoid the emergence of wage-price spirals. Annual average core inflation also continued to decline and recorded 4.9% in November 2013. Compared to a month-to-month increase of 1.3% in the CCPI in November 2012, the increase in CCPI was contained at 0.2% in November 2013. Within the marginal monthly increase in the Index, prices in the Food and Non Alcoholic Beverages sub-category increased by 0.3% reflecting higher prices of some varieties of vegetables, potatoes, red onions, big onions, green chillies and milk powder during the month. Nevertheless, a decrease in the prices of all varieties of fresh fish, dried fish and fruits was reported. In the Non-Food category, price increases were reported in the sub-categories of Transport (0.5%); Recreation and Culture (0.2%); Furnishing, Household Equipment and Routine Household Maintenance (by 0.1%) and Miscellaneous Goods and Services (by 0.1%). The increase in the price of Transport sub-category was entirely due to the upward revision in bus fares, with effect from November 2013. Meanwhile, the prices in the sub categories of Clothing and Footwear; Housing, Water, Electricity, Gas and Other Fuels; Health; Communication and Education remained unchanged during the month.