The overall rate of inflation as measured by the Colombo Consumer Price Index (CCPI) in October saw its point-to-point decreasing for the first time in 13 months to 66.0% against its previous month of 69.8% while its annualized average increased to 38.3% against 33.4%. Department of Census and Statistics announced.
This was an about turn in October, bringing an end to the current spell of runaway inflation, which set off more than a year ago when the global commodities prices started rising, caused by the surge in demand amid the supply chain bottlenecks and emergence of foreign currency shortages in the domestic market, economic analysts said.
The core inflation (Y-o-Y), which reflects the underlying inflation in the economy decreased to 49.7% in October 2022 from 50.2% in September 2022, while annual average core inflation increased to 27.8% in October 2022 from 24.1% in September 2022.
According to the Department of Census and Statistics, the Year on Year inflation of Food Group decreased to 85.6% in October 2022 from 94.9% in September 2022 and the Year on Year inflation of Non-Food Group also decreased to 56.3% in October 2022 from 57.6% in September 2022.
However, the current cost of living is not even nearly eased to some extent , as the country is still grappling with the runaway prices and its job will only be completed when the annual increase in inflation is brought down to its desired level of between 4 to 6 percent, which is expected to happen in 2024.
While the October inflation may have come as somewhat a consolation, it is unlikely to compel it to take its foot off the monetary brakes for some time until the evidence shows that the price decline is durable and comes down meaningfully towards its desired levels.
In the run up to the October inflation print, there were signs that the prices might have peaked in September, as the monthly prices, particularly in the food basket, showed some cooling.
The inflation measured by the Colombo Consumer Price Index, the authorities’ preferred inflation gauge, rose 66 percent in October from a year ago, from 69.8 percent through September, after the Central Bank raised the interest rates to sky high levels early this year, in its relentless pursuit to tame the prices through demand destruction policies.
The overall consumer prices declined 0.4 percent in October from a month earlier while the food prices also fell by 2.0 percent after decelerating for three consecutive months.
However, the annual food prices are still at hyperinflationary levels, with such prices having soared by 85.6 percent, coming off a peak of 94.9 percent reached in September, which caused a large majority to significantly cut down on their food intake while pushing the poor and vulnerable into starvation.
The earnings reports of companies for the September quarter showed a broad base softening in demand, due to the escalated cost of living and deep economic downturn.
However, in the last few weeks, there was some easing in the prices of certain essential goods, after the foreign currency conditions in the domestic market improved somewhat, enabling imports and the significantly dampened demand.
However, the prices still remain manifolds higher than where they were a year ago, after the rupee collapsed, shedding nearly 100 percent of its value
