Sri Lanka consumer inflation dips to 49.2% y/y in March (updated)

Celestial Asia Securities Holdings

21/04/2023 11:28

(Adds background and analyst comments)
    By Uditha Jayasinghe
       April 21 (Reuters) - Sri Lanka's National Consumer Price
Index (NCPI)  LKNCPI=ECI  eased to 49.2% year-on-year in March,
after a 53.6% rise in February, the statistics department said
on Friday.
    Food inflation eased to 42.3% in March from 49% in February,
while non-food inflation was at 54.9%, the Department of Census
and Statistics said in a statement. 
    This is the first time inflation has dropped below 50% since
August last year.
    The island's 22 million people have faced soaring inflation
since early 2022, partly caused by a severe foreign exchange
shortage that triggered the worst financial crisis in seven
decades and forced the country to default on its debt
repayments.       
    "Given the high base, subdued demand and improved costs
because of lower global commodity prices and a more stable
currency, Sri Lanka could see its inflation reducing to below
40% from the end of April onwards," said Sanjeewa Fernando
Senior Vice President Research at Asia Securities.    
    Sri Lanka's central bank kept interest rates steady in April
and expressed optimism that inflation would decelerate sharply
in the coming months, in its first policy decision since
securing a $3 billion bailout from the International Monetary
Fund (IMF).
    Central bank Governor Nandalal Weerasinghe said a favourable
base effect would kick in from next month with inflation
projected to hit single digits by end-December. urn:newsml:reuters.com:*:nL1N3670W3
    The NCPI captures broader retail price inflation and is
released with a lag of 21 days every month.
    The Colombo Consumer Price Index (CCPI)  LKCCPI=ECI ,
released at the end of each month, eased to 50.3% in March from
50.6% in February, data from the statistics department showed. 

 (Reporting by Rama Venkat in Bengaluru, editing by John
Stonestreet and Louise Heavens)
 ((ramavenkat.raman@thomsonreuters.com; https://twitter.com/ramavenkat0607;))