Sept. national inflation accelerates to 6.4% on higher food prices

Inflation measured by the broader National Consumer Price Index (NCPI) increased for the third month in September, amid higher food prices while non-food inflation remained largely unchanged.

The headline prices, measured based on the NCPI, rose by 6.4 percent during the 12 months to September, accelerating from 6.2 percent in August and 6.1 percent in July, mostly on food prices.

Prices of coconuts, coconut oil, vegetables, big onion, rice, turmeric powder and sugar went up in September.
Considering the impact higher food prices have on the cost of living, the government last week removed import taxes on selected commodities from dhal, canned fish, big onions and sugar. In order to arrest the rapid increase in coconut prices, predominately caused by the flourishing export demand for kernel-based products post pandemic, the Consumer Affairs Authority in the final week of September set a maximum retail price for coconut, which ranges between Rs.60 and Rs.70, depending on the circumference of the nut.

The effects of both these actions will reflect in the inflation report for October.

Prices of rice is expected to remain unchanged or come further down, as Sri Lanka produced a record harvest in the Yala harvesting season, the highest since 2015. The Agriculture Department said the harvest is sufficient for five months of consumption.

Earlier, the inflation in the Colombo district for September decelerated to 4.0 percent, from 4.1 percent in August, indicating that the mostly used price gauge to decide on the interest rates remains within the desired ranged of 4 to 6 percent.

Food inflation, measured under the NCPI, when taken in isolation, rose by 12.7 percent year-on-year in September, decelerating from 13.2 percent in August, while the prices jumped 1.1 percent on a month-on-month basis, from 0.5 percent increase in August.

The non-food inflation was up 1.4 percent YoY in September, from 1.1 percent in August.

Meanwhile, inflation measured based on the so-called core prices, which removes the effects of the often volatile items such as food and energy, rose by 4.8 percent in the 12 months to September, from 4.6 percent in August.