The Web Sri Lanka In Focus

Thursday 31 January 2008

S.Lanka's annual inflation edges up to 16.4 pct in Jan

Sri Lanka's annual inflation rate measured on a 12-month moving average stood at 16.4 percent in January on a new index, up from 15.8 percent in December, due to higher food and fuel prices, the government said on Thursday.

Consumer prices rose 20.8 percent in January from a year earlier, higher than an annual rise of 18.8 percent in December the Census and Statistics Department said.

"Prices of wheat and fuel increased considerably due to high global prices," said D.C.A. Gunawardhana, director at the department. "Vegetable prices also went up as there was a shortage in supply due to seasonality."

The Census and Statistics Department introduced the new index from December, saying the old measure was outdated.

Under the old index, which will be phased out in March, the annual inflation rate measured on a 12-month moving average stood at 17.6 percent in January, slightly up from 17.5 percent in December.

Consumer prices, according to the old index, rose 21.6 percent in January from a year earlier, higher than an annual rise of 16.4 percent in December.

Analysts said they blamed the government for high expenditure.

"Commodity price increases are a global phenomena. It's not unique to Sri Lanka," said Channa Amarathunga, an economist at Boston Capital. "So the government has to tighten its monetary policy and reduce government expenditure."

Despite high inflation, the central bank held its key policy rates steady in January for a 11 month, keeping the overnight repurchase rate at 10.5 percent and reverse repurchase rate at 12 percent.

Source: REUTERS