Producer prices show how inflation remains sticky across supply chains 

Producer prices budged only a very little in December while monthly prices climbed again after an about turn from a month ago reflecting that prices confronted by suppliers still remain extremely sticky. 
The Producer Price Index (PPI) for December recorded an 89.0 percent increase from a year ago period, slowing from 89.4 percent in November. 
Producer prices measure the level of inflation faced by suppliers across the supply chain before it is felt by the end consumer. 
Producer prices typically reflect in the consumer prices with a lag of a month or so. 
The consumer prices in January 2023, measured by the Colombo Consumer Price Index (CCPI) rose by 54.2 percent, slightly easing from December’s 57.2 percent.

The gap between CPI and the PPI reflects that not all prices are fully passed onto the end consumer due to market dynamics. The ongoing December quarter earnings season provides evidence of the level of margin contraction experienced by companies.  
The Central Bank has raised interest rates to their highest levels in many years to tame inflationary pressures. The prices in Sri Lanka reached near hyperinflationary levels by the third quarter of last year before it started easing thereafter. 
The prices have now made a turnaround and are widely expected to be on the disinflationary path.

The PPI showed prices of agricultural activities had increased by 47.6 percent, manufacturing by 96.9 percent and utilities sub-sector comprising of electricity, gas, steam, air conditioning and water supply by 68.8 percent over the same period last year. 
Meanwhile, the monthly prices which provide better visibility over the near term direction of  prices showed 0.2 percent increase from November. 
Monthly prices of agriculture slipped 3.7 percent, while manufacturing rose by 0.7 percent and utilities by 0.1 percent.