Inflation moved up marginally in May

The rate of inflation as measured by the point-to-point change in the Colombo Consumers’ Price Index (CCPI) (2002=100), computed by the Department of Census and Statistics increased to 3.3 per cent in May, 2009 compared to 2.9 per cent in April, 2009.
Meanwhile, the annual average inflation rate continued to decelerate and recorded 14.7 per cent in May, 2009 compared to 16.7 per cent in the previous month.
The CCPI increased by 2.0 per cent in May, 2009 over the previous month. The upward revision of price of gas in response to the price movement in the global market and increase in prices of sugar and dhal with the removal of price ceiling imposed by the government, at the beginning of the month were the main contributory factors to the increase in the CCPI. Further, certain prices in the food category, mainly the most varieties of fish, chicken, eggs, vegetables, coconut and coconut oil also reported increases during the month.
The Core inflation, on a point-to-point basis remained unchanged at 13.5 per cent in May, 2009. However, as a result of the increase in the monthly core index by 0.3 per cent, the annual average core inflation rate increased from 15.5 per cent in April, 2009 to 15.8 per cent in May, 2009.
As the external price pressures are expected to be minimal, the outlook for domestic inflation is expected to be favourable throughout 2009. Inflation is expected to remain at single digit level reflecting the complimentary impact of tight monetary policy adopted by the Central Bank during the past years.