February inflation eases to 4.5% on base effects and low food prices

Sri Lanka’s headline inflation, which consists of all items in the basket of Colombo Consumer Price Index (CCPI) eased to 4.5 percent during the 12 months to February from 5.8 percent in January over the base effects and lower food prices.

February marked the easing of inflation for the fourth consecutive month since the index rose to 7.8 percent in October 2017.

February’s inflation is also the lowest since 4.5 percent reported for December 2016.

On a month-on-month (MOM) basis, the headline inflation fell 0.7 percent, from just 0.1 percent in January, the biggest MOM contraction since August 2016.

Sri Lanka’s prices were rising since then due to higher credit growth, currency collapse and adverse weather conditions, which negatively affected the harvesting seasons driving the prices of rice and vegetables higher.

Meanwhile, the so called core prices, which measure the inflation barring the volatile items such as food and energy, rose by 3.5 percent in February, unchanged from January.

However, on a MOM basis the rise in core inflation eased to 0.2 percent, from 0.6 percent increase in January.

The food inflation eased by 2.9 percent in February from 1.9 percent in January as the Maha harvesting season stocks have started coming into the market.