Inflation moves up due to flood damage in February, says CB

The Central Bank said yesterday that inflation in February moved up due to the impact of the flood damage.

It said that the annual average inflation, as measured by the Colombo Consumers’ Price Index (CCPI) (2002=100), computed by the Department of Census and Statistics, increased marginally to 6.1% in February from 6% in January, 2011.

However, on a year-on-year basis, inflation increased to 7.8% as anticipated, mainly due to the increase in prices of the most varieties of vegetables, coconut, coconut oil, red onions and rice primarily owing to both crop destruction and transport dislocations that occurred due to the flood situation that prevailed in major food producing areas.

Meanwhile, core inflation, both in terms of year-on-year and annual average bases, decelerated further to 2.9% and 5.5%, respectively, in February 2011 compared to 3.6% and 6% in the previous month.

The contribution to the monthly increase of 1.2% in the Index came mainly from price increases in the sub category of Food and non-alcoholic beverages (2.1%).

Within the Food sub category, price increases were registered for vegetables, rice, coconut, coconut oil, red onions and green chillies owing mainly to supply shortages resulting from heavy rains and floods.

Price upsurges in major agricultural commodities are expected to be temporary with prices returning to normal levels once supplies resume as seen towards the end of February. However, prices of big onions, potatoes and some varieties of fish declined.

Further, price increases were recorded in the sub categories of Clothing and footwear (1.3%); Furnishing, household equipment and routine household maintenance (0.5%); Health (0.2%); Transport (0.2%); Housing, water, electricity, gas and other fuels (0.1%); Education (0.02%); and Miscellaneous goods and services (0.1%).

Meanwhile, prices in the sub categories of Recreation and culture and Communication remained unchanged during the month.