National inflation decelerates to 2.1% in August

• Food inflation records negative 5.3%
• Non-food prices up 9%

Sri Lanka’s country-wide inflation measured by the National Consumer Price Index (NCPI) rose at 2.1 percent in August on a year-on-year basis, against 4.6 percent in July, the data released by the country’s statistics office showed.
Food inflation was recorded at negative 5.3 percent compared to negative 2.5 percent in July, reflecting that food prices in real terms have actually declined from a month ago.

Non-food prices rose at 9 percent in August compared to 10.9 percent in July.
NCPI is not authorities’ preferred inflation gauge. It captures broader retail price inflation and is released with a lag of 21 days every month.
The inflation measured by Colombo Consumer Price Index (CCPI), which is the Central Bank’s preferred inflation index, decelerated to 4 percent in August from 6.3 percent in July.
The Central Bank has been able to successfully bring down inflation from the peak of almost 70 percent last year to the current levels, through a mix of policy measures including extremely high interest rates.
With inflation easing sharply, the Central Bank is seen loosening its grip on interest rates, and has even brought in administrative measures on banks to quicken the deceleration of market interest rates.
Sri Lanka’s economy experienced a 3.1 percent contraction in the second quarter. Authorities anticipate a return to positive growth, either by the third quarter at the latest or certainly by the fourth quarter.