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 Census and Statistics Department increased to 3.3 percent in May compared to 2.9 percent in April.

Meanwhile, the annual average inflation rate continued to decelerate and recorded 14.7 percent in May, compared to 16.7 percent in the previous month.

The CCPI increased by 2.0 percent in May, 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 percent in May. However, as a result of the increase in the monthly core index by 0.3 percent, the annual average core inflation rate increased from 15.5 percent in April to 15.8 percent in May.

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.