Consumer inflation slows to 10.8%

COLOMBO: Sri Lanka’s consumer price inflation slowed to 10.8% year-on-year in June from 22.1% in May, helped by a sharp moderation in food price rises, the statistics department said in a Reuters report.

The National Consumer Price Index (NCPI) captures broader retail price inflation and is released with a lag of 21 days every month.

Food prices rose 2.5% in June, slowing from an annual rise of 15.8% in May, the Department of Census and Statistics said in a statement.

Prices for non-food items rose 18.3% year-on-year in June. Sri Lanka’s inflation has come down sharply in the last two months from the runaway levels seen earlier, partly due to the statistical base effect, but also helped by better harvests, and a stronger rupee, which has lowered costs for fuel and power.

A $2.9 billion bailout from the International Monetary Fund (IMF) secured in March has topped up foreign reserves, which had dwindled to record lows in early 2022 and plunged the island into its worst financial crisis in more than seven decades.

“This is in line with expectations. We will see inflation hit single digit levels at the end of July, possibly reaching about 8.5%,” said Shehan Cooray, head of research at Acuity Stockbrokers.