National consumer prices eased to 1.1% in August on food and low electricity tariffs

The prices measured nationally showed substantial deceleration, on the back of the easing food prices and downward revision to electricity tariffs, which managed to put some amount of money back in the pocketbooks of the people in August.

The prices measured by the National Consumer Price Index rose by 1.1 percent in the year through August 2024, down sharply from 2.5 percent in the year through July 2024.

The prices measured on a monthly basis fell 1.4 percent in August 2024, faster than the 0.6 percent decline in July.

The lower prices were possible mainly from the lower food prices, which fell 1.8 percent in August, after rising by 0.5 percent in July.

However, measured on an annual basis, the food prices were up 2.3 percent in August 2024, down from 2.9 percent through July. August saw the prices of vegetables, fresh fish, eggs, chicken, sugar and the likes of many food staples coming down, offsetting the increases in the prices of only a few food staples during the same period.  Meanwhile, non-food inflation fell by 1.0 percent in August, after a 1.4 percent decline in July.

The non-food prices measured annually eased to 0.2 percent in August, from 2.2 percent through July, as the government revised the power tariffs down substantially, passing down the low generation cost possible from the higher hydro capacity and also the low global energy prices.

The Monetary Policy Board of the Central Bank is scheduled to meet today to deliberate on the sufficiency of the policy support to the economy, which has been growing lately at a solid pace.

Both the manufacturing and services activities have been robust while the economy grew by 5.0 percent in the first half, supported by the normalised inflows from the remittances and tourism while the eased financial conditions too helped.

The bets are evenly divided between the stay in the policy and another 25-basis-point cut tomorrow. The medium-term risks to inflation too leaned to downside in the absence of any extraordinary events. The Central Bank maintained that the prices would stay below their medium-term target of 5.0 percent through the first half of next year, before slightly overtaking that level briefly.