May inflation increases to 0.2% over higher food prices

During the 12 months to May 2015, Sri Lanka’s headline inflation measured by the Colombo Consumer Price Index (CCPI) rose by 0.2 percent, increasing from 0.1 percent a month ago, the data released from the Department of Census and Statistics showed.

May inflation was largely driven by the upward movement in food prices as the inflation of the food group increased from 4.3 percent in April to 4.6 percent in May 2015 on a year-onyear (YoY) basis.

Further, on a YoY basis, the non-food index increased from -3.6 percent in April to -3.5 percent in May 2015.

Meanwhile, on a month-on-month (mom) basis too food sub-index rose by 0.70 percent whereas the non-food items increased by only 0.02 percent.

As a result, the CCPI increased by 1.3 index points or 0.72 percent from April 2015 to 179.8.

“This increase represents an expenditure value of Rs.358.72 in the ‘Market Basket’. There are 10 main groups of items in the market basket,” the department stated in a statement.

Among the food items which showed significant price increases during the months were fresh fish, milk powder, coconuts, vegetables and big onions.

However, t he 12-month moving average i nflation declined t o 1.9 percent in May from 2.1 percent a month ago.

Last month the Central Bank said it expects an annual average headline inflation of 3.0 percent for 2015 while revising the economic growth target down to 7 percent from earlier 8 percent target. In March, the country’s headline inflation came down to just 0.1 percent, further slowing from 0.6 percent in February due to the effect of the reduction in the administrative prices and the removal of taxes on certain essential food items from the interim budget.

The CCPI basket and their weights are due to be revised based on the household income survey in 2012/13 in order to better reflect the changing consumer patters of the Lankans.

The current CPI weights are derived from the household income and expenditure survey in 2006/2007.

Prices for items in the CCPI are collected from 14 selected centres located i n Colombo metropolitan area. The consumer basket includes 373 items which represent the typical urban households’ consumption expenditure.