Inflation remains unchanged in March

Inflation, as measured by the change in the Colombo Consumers' Price Index (CCPI) 2006/07=100), which is computed by the Department of Census and Statistics, decelerated further to 5.7 percent in March, on an annual average basis, from 6.0 percent in February 2014.

This declining trend has been observed continuously since June 2013. Meanwhile, inflation on a year-on-year (YoY) basis remained at 4.2 percent in March, which was the same rate in the previous month.

Inflation remained subdued in March 2014 mainly due to low increase in prices of items in the Non-food category.

The prices in the sub categories of housing, water, electricity, gas and other fuels; Furnishing, household equipment and routine household maintenance; transport; and communication remained unchanged.However, the prices in the Miscellaneous Goods and Services (0.8 percent), Clothing and Footwear (0.1 percent), Health (0.1 percent), Recreation and Culture (0.1 percent) and Education (0.1 percent) slightly increased.

The Food and Non-alcoholic beverages, which increased only by 0.1 percent in March 2014 compared to the previous month was the main contributor towards the 0.1 percent monthly increase in the CCPI.

Within the food category, price declines were recorded in red onions, big onions, potatoes, most varieties of vegetables and fresh fish. However, prices of milk powder, tea, eggs, cheese, butter, margarine, some varieties of fruits and green chillies recorded increases.

Annual average core inflation which decelerated steadily from June 2013 reached 3.5 percent in March 2014 compared to 3.8 percent in the previous month, reflecting well-contained demand driven inflationary pressures.

YoY core inflation increased to 3.4 percent from 3.1 percent in February.