:Sri Lanka’s consumer price index fell 1.7 per cent year-on-year in December after dropping 2.1 per cent in the previous month, the statistics department said on Tuesday. The Colombo Consumer Price Index, a leading indicator for broader national prices, tracks inflation in Colombo, Sri Lanka’s largest city.
Prices in the food category increased slightly to 0.8 per cent in December from 0.6 per cent the previous month. In the non-food category, prices were 3 per cent lower than a year earlier, compared to a decline of 3.3 per cent in November.
Reductions in power tariffs and fuel prices as well as an appreciating rupee have helped to reduce inflation to the lowest point in nine years, analysts said.
“Overall, the annual average inflation ended at 1.2 per cent for the past 12 months, marking a notable recovery from the 17.4 per cent faced a year prior,” said Raynal Wickremeratne, co-head of research at Softlogic Stockbrokers.
“We expect January to witness a minus 1.5 per cent rate on inflation, with it returning to positive territory over the next three month period.”
Sri Lanka suffered record inflation after its worst financial crisis in decades pummelled the economy, which has stabilised since it secured a $2.9-billion bailout from the International Monetary Fund in March 2023.
Taking advantage of low inflation, Sri Lanka’s central bank set a new single policy rate of 8 per cent last month, easing monetary settings below previously used benchmarks and setting the stage for a sustained recovery from the crisis.
Sri Lanka’s economy is expected to grow by 4.5 per cent-5 per cent in 2024, slightly above the World Bank’s estimate of 4.4 per cent, latest central bank data showed.
