Headline inflation in Sri Lanka declines sharply in April 2023

May 02, 2023 (MLN): Headline inflation in Sri Lanka, as measured by the year-on-year change in the Colombo Consumer Price Index decreased to 35.3% in April 2023 from 50.3% in March 2023, according to the statement issued by the Central Bank of Sri Lanka. 

The lower level of realized inflation compared to the projections made, was mainly due to higher-than-expected price decreases observed in Volatile Food and Non-Food items.

The food inflation (Y-o-Y) decreased to 30.6% in April 2023 from 47.6% in March 2023, while the Non-Food inflation decreased to 37.6% YoY in April 2023 from 51.7% in March 2023.

The monthly change of CCPI was recorded at -1.39% in April 2023, which is the highest monthly decline recorded so far in CCPI (2021=100) series.

This decrease was mainly due to price decreases observed in the items of the Non-Food category, which was -1.37%.

Meanwhile, the food category also recorded a monthly decline of 0.02%. The core inflation YoY, which reflects the underlying inflation in the economy, decreased to 27.8% in April 2023 from 39.1% in March 2023.

Looking ahead, based on the available information, the anticipated declining trend of inflation is expected to continue through 2023, bringing down the prevailing high inflation towards single-digit levels by late 2023, the statement added. 

This disinflation process is supported by subdued aggregate demand owing to tight monetary and fiscal policy measures, normalization of supply conditions both globally and domestically, greater pass-through of lower global commodity prices, along with the favorable statistical base effect, it noted. 

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