By: Staff Writer
Colombo (LNW): Sri Lanka’s central bank is pushing for an inflation target of around 4 to 6 percent, for the country in the belief that price pressures needed to push up growth to high levels, officials said.
Director of the Central Bank’s Director of Economic Research P K G Harishchandra explaining the rationale for the agency’s high inflation target said that it is diffuclt to double the growth without creating price pressure.
Proving central Bank’s projection correct, Sri Lanka’s Department of Census and Statistics says that headline inflation based on the Colombo Consumer Price Index (CCPI) has further reduced to 4 percent in August, compared to 6.3 percent in July 2023.
According to its latest report, Colombo’s food Inflation has decreased to -4.8% in August, from -1.4% in July 2023.
The CCPI for all items for the month of August 2023 was 190.1 and it records a decrease of 0.1 in index points. Meanwhile the overall rate of inflation as measured by CCPI on Y-on-Y basis is 4.0% in August 2023.
The CCPI for all items for the month of August 2023 was 190.1 and it records a decrease of 0.1 index points that is 0.02 percentage change compared to the month of July 2023 on an expenditure value basis for which the index was 190.2. This represents a decrease of expenditure value by Rs 39.08 in the “Market Basket”.
The month-on-month change was contributed by decrease in Food items by 0.41% and increase in Non Food items by 0.39%.
These details conform that the sky rocketing of price of food items has been the same as previous months although the rate of price change has come down drastically, several economic experts said.
Former Professor of Economics at the University of Colombo, Sirimal Abeyratne said that under normal circumstances, the prices tend to rise rather than to fall.
Therefore, the “average” price level of a country continues to rise, while that average price level reflects all the prices of a set of essential goods and services consumed by an average household.
While the increase in the average price level is inflation, sometimes the rate of inflation rises indicating that the prices rise at a higher rate. Sometimes, the rate of inflation falls indicating that the prices rise at a lower rate. Prices are, anyway rising!, he added.
The overall rate of inflation as measured by the CCPI on Y-on-Y basis is 4.0% in August 2023 and Y-on-Y inflation calculated for the month of July 2023 was 6.396.
The Y-on-Y inflation of Food Group decreased to 4.8% in August 2023 from -1.4% in July 2023 and the Y-on-Y inflation of Non Food Group decreased to 8.7% in August 2023 from 10.5% in July 2023.
