Colombo inflation eases to 51.7% in February

The Colombo inflation decelerated for the fifth consecutive month in February continuing the disinflation path which was envisaged by the Central Bank, but the non-food inflation accelerated from a month ago reflecting still lingering price pressures entrenched in the economy.

Prices measured by the Colombo Consumer Price Index registered a reading of 50.6 percent in the twelve months to February, decelerating from 51.7 percent through January. 
Monthly inflation rose by 0.5 percent in February, same level from a month ago, reflecting still sticky nature of some of the prices in the consumer spending basket. 

The core inflation barring the often-volatile food, energy and transport rose by 43.6 percent, easing from 45.6 percent through January, reflecting the underlying price pressures still prevalent in the economy. 
The core price index under the CCPI is the most preferred inflation gauge by officials and is used for policy making and determining the trajectory of the rates. 

The Monetary Board is largely expected to leave the key policy rates unchanged at the current level at the upcoming policy meeting schedule for Friday, March 03. 
Meanwhile, the Colombo food inflation rose by 54.4 percent on an annual basis, decelerating from 60.0 percent through January. 

Measured on a monthly basis, food prices declined by 2.2 percent, turning around from the 0.8 percent increase in January. Monthly prices are a better indicator of near term price pressures than the prices measured on an annual basis which is distorted by the higher base effects in the previous year.

Prices of vegetables, eggs and rice registered sharp declines in February from their January levels helping the monthly deceleration in prices. 

Meanwhile, non-food prices rose by 48.8 percent annually and 1.8 percent monthly, firming up from 47.9 percent and 0.5 percent in the previous month, reflecting the constant changes in the prices of products and services in the non-food basket in line with the changes in the policies and global commodities prices. 

For instance, February non-food prices were predominantly driven by the electricity bill which was revised again by an average 66 percent in February and the increase in the petrol prices at the pump. 
With the rupee showing signs of appreciation and also with the slight ease seen in global commodities prices, Sri Lanka could see further deceleration in inflation in the months ahead in the absence of any major exogenous shocks.