Colombo inflation cools to 0.9% in May

1 June 2024 11:25 am Views - 582

• Both food and non-food prices ease

The Colombo district inflation eased further to 0.9 percent in May, from 1.5 percent in April, as both food and non-food prices continued their months-long streak of declines, although the prices could firm up slightly in the coming months, due to somewhat higher prices for staples, as a result of the current weather and revving up of economic activities with the lower interest rates.
Measured on a monthly basis, the prices fell 0.6 percent in the month, adding to the 1.9 percent and 0.8 percent falls in the prices in both March and April, respectively.
After a sharp rise in prices in the nearly last two years, the prices came back to better balance from 2023 onwards, due to the easing of global energy prices and other commodities prices.
Meanwhile, the availability of foreign currency in the country, due to the normalising tourism and remittances, also helped the prices to come back to the acceptable level, as the imported goods could be made in sufficient supply.
In the meantime, the Central Bank killed the economy and pushed into a prolonged downturn by raising the interest rates to sky-high levels and pushed hundreds of thousands of businesses out of business and swaths of people into poverty and hunger.    
The food prices measured annually remained unchanged in May, after rising 2.9 percent in April but the monthly prices declined 1.2 percent.
Meanwhile, the non-food prices accelerated slightly to 1.3 percent in May, from 0.9 percent. But the monthly prices declined by 0.3 percent, after falling 0.7 percent.
Almost every sub-category, except for clothing and footwear and consultation fees to specialist doctors, fell between April and May, including energy prices helping to cool the prices.
Meanwhile, the so-called core prices measured barring the often-volatile food, energy and transport prices, rose by 3.5 percent, from 3.4 percent in April.
The softer prices helped the Central Bank to maintain its dovish monetary policy stance for nearly one year now.
This week, the Central Bank left the key policy rates unchanged, to give more time for the previous cuts to take full effect.
However, it kept the door open for future cuts, depending on the fresh data.
Inflation, it said, is projected to stay within its medium-term target of 5.0 percent, absence of any exogenous events.
Now that the Central Bank claimed winning the fight against inflation, it now has to help to get the economy to grow faster.
However, Central Bank Governor Dr. Nandalal Weerasinghe said this week that they do not have a growth mandate.
If they do not have a growth mandate, either due to the new Central Bank Act or by their own thinking, they should better revert to the old Monetary Law Act forthwith or change their ways and economic growth should well be in their mandate.