Sri Lanka inflation slows to 1.1% in August
· CNA · JoinCOLOMBO: Sri Lanka's consumer price inflation slowed to 1.1 per cent year-on-year in August from 2.5 per cent in July, official data showed on Tuesday (Sep 24) after the country voted in a new president hoping to strengthen its economic rebound.
The National Consumer Price Index captures broad retail price inflation and is released with a lag of 21 days every month.
Food price inflation eased to 0.81 per cent in August from 2.9 per cent in July, the Department of Census and Statistics said.
Non-food price inflation slowed to 0.55 per cent in August from 2.2 per cent the previous month as demand remained muted.
Sri Lanka voted in Anura Kumara Dissanayake as its new president on Saturday. The leftist leader has pledged to support the country’s economy as it emerges from a financial crisis caused by a severe shortfall of foreign exchange two years back.
However, Dissanayake's intention to rework a US$2.9 billion International Monetary Fund programme that has helped the island reduce inflation, strengthen its currency and improve foreign exchange reserves has made markets and investors nervous.
Political uncertainty has muted demand and kept inflation low, analysts said, as businesses await fresh policy direction.
“We have seen demand coming down because of the political uncertainty but we should see demand improve as this uncertainty clears up over the coming weeks," said Dimantha Mathew, head of research at First Capital.
Inflation will remain below the central bank's target of 5 per cent, he added.
The Central Bank of Sri Lanka is expected to keep rates unchanged in its next interest rate decision on Friday after unexpectedly reducing rates by 25 basis points to 8.25 per cent and 9.25 per cent in July.
Sri Lanka's economy is expected to grow by 3 per cent in 2024 after contracting by 2.3 per cent last year and by 7.3 per cent during the height of the crisis in 2022.
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