COLOMBO: Sri Lanka’s country-wide inflation decelerated to 8.4 percent in April 2017 from an over two-year high of 8.6 percent in March 2017 on a year-on-year basis, the Central Bank said in a statement. Sri Lanka’s Central Bank has failed to keep inflation in check despite having a relatively easy informal target of 5.0 percent. The Central Bank prints money undermining the currency, sterilizes forex interventions generating balance of payments trouble and liberally provides cash from liquidity windows to enforce its loose policy in times of strong credit growth.
Both Food and Non-food categories contributed towards year-on-year inflation in April 2017, as measured by the change in the National Consumer Price Index (NCPI) compiled by the Department of Census and Statistics. The change in the NCPI, measured on an annual average basis, increased to 6.0 percent in April 2017 from 5.6 percent in March 2017, the statement said. The NCPI increased from 119.5 index points in March 2017 to 121.0 index points in April 2017. “This monthly increase was mainly due to the increase in prices of the items in the Food category,” the statement said. “The NCPI Core inflation, which reflects the underlying inflation in the economy, decreased significantly to 5.9 percent in April 2017 from 7.0 percent in March 2017 on a year-on-year basis,” it said. “This decline is due to relatively low monthly change and base effect. Annual average NCPI Core inflation remained unchanged at 6.6 percent in April 2017.”
Core inflation is a deceptive measure that takes our items such as food and energy, devised by Western Mercantilists. Targeting core inflation in the US led to the economic bubble that eventually ended in the Great Recession, critics say. Within the Food category, prices of vegetables, coconuts, bananas, fresh fish, potatoes, red onions and chicken increased during the month of April. In the Non-food category, prices of items in Clothing and Footwear; Furnishing, Household Equipment and Routine Household Maintenance; Transport; Restaurants and Hotels and Miscellaneous Goods and Services sub-categories increased. Prices of certain items within the Alcoholic Beverages and Tobacco sub-category also increased during April 2017, the statement said. Prices in Housing, Water, Electricity, Gas and Other Fuels; Health; Communication; Recreation and Culture and Education remained unchanged during the month.
