The Monetary Board’s decision is consistent with its aim of stabilising inflation at mid-single digit levels in the medium term, thereby contributing to a high and sustainable growth trajectory of the Sri Lankan economy.
Headline Inflation, as measured by the change in the National Consumer Price Index (NCPI, 2013=100), which is compiled by the Department of Census and Statistics (DCS), decreased to 2.5 per cent in August 2018 from 3.4 per cent in July 2018, on year-on-year basis, mainly driven by monthly decline in Food prices in August 2018, Central Bank stated in a media release.
The change in the NCPI measured on an annual average basis decreased from 5.1 per cent in July 2018 to 4.7 per cent in August 2018.
When the monthly change is considered, the NCPI decreased from 126.6 index points in July 2018 to 125.4 index points in August 2018 largely due to decline in prices of the items in the Food category, particularly that of vegetables, coconuts, green chillies and fresh fish.
Meanwhile, price increases were observed in the sub-categories in the Non-food category, particularly that of petrol, diesel and taxi in the Transport sub-category; some items in the Housing, Water, Electricity, Gas and Other Fuels; Furnishing, Household equipment and household maintenance; and Alcoholic beverages and Tobacco.
The NCPI Core inflation, which reflects the underlying inflation in the economy, increased to 2.7 per cent in August 2018 from 2.3 per cent in July 2018 on year-on-year basis. Meanwhile, annual average NCPI Core inflation declined to 2.5 per cent in August 2018 from 2.7 per cent in July 2018