Inflation drops in August

Inflation, based on the change in the Colombo Consumers' Price Index (CCPI) (2006/07=100), dropped to 4.5 percent in August compared to 4.7 percent in July this year, a Central Bank release said.

The year -on-year (YoY) inflation also decreased to 3.5 percent in August 2014 from 3.6 percent in the previous month, as a result of decrease in price of food items, especially of vegetables.

The decline in prices of items in the Food and Non-alcoholic beverages sub-category was the main contributor to the monthly decrease (0.5 percent) in the CCPI in August 2014 .

Within the Food category, average prices of almost all the varieties of vegetable s, green chilies, potatoes, red onions and some varieties of fish decreased compared to the previous month due to the seasonal factors. Meanwhile, prices of rice, fruits and eggs increased during the month.

Within the Non-food category, prices of items in the sub group of Clothing and Footwear; Communication; Recreation and Culture; and Miscellaneous Goods and Services increased.

Prices in all the other sub groups, namely, Housing, Water, Electricity, Gas and other Fuels; Furnishing, Household Equipment and Routine Household Maintenance; Health; Transport; and Education almost remained unchanged during the month compared to the previous month.

Core inflation, which indicates the underlying inflation in the economy, increased marginally in August 2014, over the previous month.

Accordingly, core inflation, on a YoY and annual average basis, increased to 3.9 percent and 3.2 percent, respectively, in August 2014 from 3.7percent and 3.1percent, in July 2014.