COLOMBO: Inflation declined marginally to 0.1% YoY in June 2015 from 0.2% recorded in May 2015 with annual average inflation declining to 1.7% in June from 1.9% in May 2015. However, monthly CCPI increased by 1% from May to June 2015 caused by the increase in food prices. In the Non-food category prices in Clothing and Footwear; Furnishing, Household Equipment and Routine Household Maintenance and Recreation and Culture; sub categories increased while others remained unchanged.
Export earnings drop in April
Trade deficit widens YoY: The deficit in the trade account in April 2015 widened by 15.1% to US$ 783mn in comparison to US$ 680mn in April 2014. On a cumulative basis, trade deficit during the first four months of 2015 increased by 3.9% to US$ 2,713 mn.
Earnings from exports declined 7.4% YoY to US$ 707.5mn in April 2015 from US$ 764.3mn recorded in April 2014. The reductions recorded in exports earnings from tea (-12.7%), petroleum products (-42.7%), sea foods (-41.2%), rubber products (-16.2%) and textiles and garments (-2.0%) respectively contributed for the drop in exports during the month. On a cumulative basis, export earnings during the first four months of 2015 declined marginally by 0.3% YoY to US$ 3,569mn.
Total import expenditure in April 2015 increased by 3.2% to US$ 1,490mn mainly due to growth in imports led by personal motor vehicles which increased by more than 90% followed by increase in machinery and equipment (23.6%) and transport equipment which increased by more than 100%. On a cumulative basis, expenditure on imports during the first four months of 2015 increased marginally by 1.5% YoY to US$ 6,283mn mainly led by consumer good imports followed by investment goods imports.
Policy rates remained unchanged in June
Private Sector credit increase supports continued expansion of economic activity: Credit to the private sector in April 2015 grew by 15.2% YoY with all three sectors of the economy contributing positively on the expansion of the local economy. In absolute terms, credit extended to the private sector has been increasing by around LKR 25bn on average per month up to April 2015. Monetary Board in the view that the current monetary policy stance is appropriate, kept Deposit and Lending rates unchanged at 6.00% and 7.50% respectively. Broad money supply (M2b) recorded a YoY growth of 13.9% in April 2015.
