Sri Lanka's key inflation rate eases to 50.3% in March

Colombo Consumer Price Index (CCPI) reflected a reduction in food inflation to 47.6% in March

A man fills gas into a vehicle at a fuel station in Colombo, Sri Lanka. - AP

By Reuters

Published: Fri 31 Mar 2023, 6:31 PM

Sri Lanka's key inflation rate eased to 50.3 per cent in March from 50.6 per cent in February, the statistics department said on Friday.

The Colombo Consumer Price Index (CCPI) reflected a reduction in food inflation to 47.6 per cent in March from 54.4 per cent in February, but non-food inflation reached 51.7 per cent, the Census and Statistics Department said in a statement.

Sri Lanka has been struggling with soaring prices for over a year, largely caused by its worst financial crisis since it gained independence from Britain in 1948.

The CCPI acts as a lead indicator for broader national prices and shows how inflation is evolving in Colombo, Sri Lanka's biggest city.

Inflation for March was also impacted by a massive 66 per cent power tariff hike in February, analysts said, with inflation likely to moderate faster over the next three months.

"We are likely to see inflation dropping to about 16 per cent in the second quarter because of the high base effect," said Dimantha Mathew, head of research for First Capital.

"But single digit inflation will only be seen towards the end of the year."

The island's central bank is widely expected to hold policy rates next Tuesday after a surprise 100 bps hike earlier this month as part of efforts to finalise a $3 billion bailout from the International Monetary Fund.

Sri Lanka’s national consumer price inflation, which is released with a lag of 21 days every month, increased slightly to 53.6 per cent in February from 53.2 per cent January after the country changed the base year from 2013 to 2021 last month.