Central Bank said yesterday the rate of inflation as measured by the point-to-point change in Colombo Consumers’ Price Index (CCPI) (2002=100), computed by the Department of Census and Statistics, and decelerated to a single digit level of 7.6 per cent in February, 2009.

“This is also the lowest rate recorded since February, 2006,” it added.

The Bank said the deceleration of point-to-point inflation has continued from its peak of 28.2 recorded in June, 2008. The annual average inflation rate also decelerated further and recorded 20.3 per cent in February, 2009 from its level of 21.6 per cent in the previous month.

The CCPI decreased by 0.1 per cent in February, 2009 over January, 2009. Contributions to the monthly decreases arose from the sub categories of Transport (1.7 per cent) and Food and non-alcoholic beverages (0.3 per cent).

Core inflation, on a point-to-point basis, dropped to 14.1 per cent from 15.5 per cent of the previous month, but the annual average rate rose from 14.3 per cent to 14.8 per cent. Monthly core index increased marginally by 0.7 per cent mainly due to the impact of price increases in the sub-categories of Recreation and culture (6.9 per cent), Communication (2.7 per cent), Education (1.4 per cent) and Housing and water (1.0 per cent).

Headline inflation is expected to drop to reach a rate as low as 3-4 per cent by the middle of the year, as a culmination of the reaction to monetary policy and easing up of commodity prices in the international market.