Inflation drops to 5.6 percent in April

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 5.6 percent in April 2014, on an annual average basis, from 5.7 percent in March 2014.

This is the eleventh consecutive month, in which inflation has fallen continuously from high of 8.8 percent in May 2013. Inflation on a year-on - year (YoY) basis increased to 4.9 percent in April 2014 from 4.2 percent in the previous month, mainly on account of the base effect and increased prices of several food items. The prices of items in the Non-food category, which recorded an insignificant increase in April 2014 compared to the previous month.

This caused inflation to be maintained at the mid-single digit level during the month.

The prices in the sub categories of Housing, Water, Electricity, Gas and Other Fuels, Furnishing, Household Equipment and Routine Household Maintenance, Transport, Communication, Recreation and Culture, and Education remained unchanged during the month.

However, the prices in the Miscellaneous Goods and Services (0.2 percent), Clothing and Footwear (0.1 percent ) and Health (0.1 per cent) increased marginally.

The prices of items in the Food and Non-alcoholic beverages category, which increased by 0.7 percent in April 2014 compared to the previous month, was the main contributor towards the 0.3 percent monthly increase in the CCPI.

Within the food category, price increases were recorded in many varieties of rice and vegetables, some varieties of dried fish, potatoes, red onion, green chillies and sugar. However, prices of most varieties of fresh fish, some varieties of fruits and big onion decreased.

Annual average core inflation which decelerated steadily from June 2013 reached 3.3 percent in April 2014 compared to 3.5 percent in the previous month, displaying well-contained demand conditions. YoY core inflation remained at the same level of 3.4 percent recorded in March 2014.