Wednesday, October 5, 2022

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Sri Lanka food prices soar stoking December inflation

Amid skyrocketing prices and fears expressed of a looming food crisis, Sri Lanka’s inflation recorded a new high with local super markets rationing essential commodities such as powdered milk, sugar, lentils, s as Sri Lankan banks run out of dollars to pay for imports.

The Department of Census and Statistics (DCS)  announced that  headline inflation in December was 14 percent  as against 11.1 percent  in the previous month claiming  it was mainly due to the higher price levels prevailing in both food and non-food groups.

Inflation of the food group increased to 21.5 percent in December from 16.9 percent in November. The year-on-year inflation of the non-food group increased to 7.6 percent from 6.2 percent.

DCS said contributions to the inflation rate of December 2021 from the food group and non-food group are 10.0 percent and 4.0 percent respectively. 

Whilst contributions of food and non-food groups to the inflation in December 2020 were 3.4 percent and 1.2 percent respectively, resulting in a headline inflation of 4.6 percent.

Comparing the month-on-month changes, the National Consumer Price Index (NCPI) in December 2021 increased to 161.0 from 155.3 reported in November 2021. This shows an increase of 5.7 index points or 3.7 percent as compared to November 2021.

The month-on-month change was contributed by increases of index values of food items by 3.0 percent and non-food items by 0.68 percent respectively.

DCS said price increases of food items were reported for Vegetables, Rice, Green chillies, Big onions, Potatoes, Eggs, Bread, Coconuts, Chicken, Wheat flour, Milk powder, Biscuits, Red onions, Mysore dhal, Fresh fruits, Coconut oil, Chili powder, Buns, Jak, Dried chillies and Infant milk powder. 

However, decreases in index values were reported for Green gram, Sugar and Limes.The increases in index values of non-food groups in December 2021 compared to the previous month.

This was  was mainly due to the price increases in groups of items ‘Alcoholic Beverages, Tobacco and Narcotics’ (Arrack and Betel leaves), ‘Clothing and Footwear’, ‘Housing, Water, Electricity, Gas and Other fuels’ (Kerosene oil and Firewood).

 Prices had been increased in ‘Furnishing, Household equipment, and Routine household maintenance’, ‘Transport’ (Petrol, and Diesel), ‘Restaurants and Hotels’ and ‘Miscellaneous Goods and Services’. 

Further, very slight price increases were reported in groups of ‘Health’ and ‘Recreation and Culture’. 

The price indices of ‘Communication’ and ‘Education’ groups remained unchanged during the month.

Core inflation, which reflects the underlying inflation by excluding volatile items of food, energy and transport groups in the economy as measured by the year-on-year change based on NCPI for the month of December 2021 was increased to 10.8percent  from 8.8 percent  reported in the month of November 2021.

 The spike in December in Sri Lanka was contrary to a decline in food prices globally, according to the Food and Agriculture Organisation (FAO).

FAO said world food prices fell slightly in December as international prices for vegetable oils and sugar fell significantly from lofty levels.

The FAO Food Price Index averaged 133.7 points in December, a 0.9% decline from November, but still up 23.1% from December 2020. The index tracks monthly changes in the international prices of commonly traded food commodities. Only the dairy sub-index posted a monthly rise in December.

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