Colombo inflation accelerates to 3.4% in November

Consumer prices in the Colombo district accelerated to 3.4 percent in November on year-on-year basis, up from 1.5 percent in October, as the favourable base effects that prevailed through September fizzled out. 
This indicates that people are still paying higher prices for goods and services compared to both a year ago and a month ago.
On a monthly basis, inflation rose by 1.0 percent in November from a month earlier. 
Inflation experienced a notable decline through September before reversing course, as the higher base effects waned.

Some mistook that the declining inflation means declining prices, but what inflation measures is the pace of the increase in the prices from a year ago. 
While the pace of the increase in the consumer prices slowed through September, the pace of price increases once again began to increase from October due to the absence of higher base effects in the previous year, reflecting the true price increases. 
But the rising monthly prices reflect that people have paid higher for their goods and services from what they paid a month ago. 
Food inflation rose 0.3 percent in November from a month ago reversing from a decline of 2.0 percent in the previous month.
The annual food prices however are still in deflation, as the prices have declined by 3.6 percent in November from a year ago, slowing from a 5.2 percent decline.  

Food prices are on a deflation for the fifth consecutive month, meaning they have declined from the levels seen a year ago. But people are still paying at least three to four times higher for their food compared to two years ago. 
The Central Bank has declared victory over bringing inflation under control or returning to their desired level of between 4 to 6 percent from a peak of 70 percent in September 2022 by raising interest rates to levels not seen in recent history and thereby crushing demand. 
Now that the Central Bank has established price stability as reflected in the official price indices, it has pivoted to cutting rates to stimulate demand again and thereby adding steam to the nascent economic recovery process.  The Central Bank has so far delivered a cumulative 650 basis points in rate cuts since it set off the easing cycle in early June this year. 
Meanwhile, non-food prices increased by 1.3 percent in November compared to the previous month, marking acceleration from the 0.6 percent rise in October. 
This uptick was attributed to higher expenses on electricity bills, cooking gas, and diesel, reflecting the impact of the government’s cost-reflective pricing mechanism.
On an annual basis too non-food prices rose by 6.8 percent, accelerating from 4.9 percent a month ago. 
The so-called core prices which are measured barring the often-volatile food, energy and transport costs decelerated to 0.8 percent in November from 1.2 percent in October reflecting the easing underlying price pressures in the economy.