February 22, Colombo (LNW): Sri Lanka’s inflation surged by 6.5 per cent year-on-year in January, driven by widespread price hikes attributed to the one-time impact of higher Value Added Tax (VAT) and disruptions in the supply chain due to weather-related conditions.
Monthly figures from the National Consumer Price Index (NCPI) reveal a notable 3.0 per cent increase in January, marking the highest rise in over a year, compared to 1.4 per cent in the previous month.
This aligns with the Colombo Consumer Price Index (CCPI) released three weeks ago, which recorded a 6.4 per cent inflation rate for January, up from 4.0 per cent in December.
Anticipated by authorities, these inflationary pressures were expected to hover around 7.0 per cent in both January and February.
The core national prices, excluding food, energy, and transport, rose by 2.2 per cent year-on-year in January, indicating underlying inflationary pressures.
These figures serve as a key indicator for policy-making and predicting future inflation trends.
Food prices surged by 4.1 per cent annually in January, accelerating sharply from December’s 1.6 per cent, while monthly increases slowed to 2.6 per cent from 3.6 per cent in December.
Almost all food commodities saw price increases except for four types.
Non-food inflation, encompassing energy and services, rose by 8.5 per cent annually, up from 6.3 per cent in December, with a monthly increase of 3.2 per cent compared to a 0.3 per cent decline in December.
This rise was primarily driven by higher housing rent, petrol, and L.P. gas prices.
The surge in recreational activities and dining out has contributed to increased non-food prices, evident from rising expenditures at restaurants and hotels.
Additionally, education costs have weighed heavily on parents’ finances, with significant increases in tuition fees observed in January.
