Business Times

Economists predict increased inflation

By Natasha Gunaratne

Economists are forecasting inflation in Sri Lanka to increase in the near future. One economist from the University of Colombo’s Economics Department, Sirimal Abeyratne said he feels inflation will rise due to the ongoing recovery of the global economy and the fact that petroleum prices worldwide are rising, having reached US$87 per barrel this week.

Sirimal Abeyratne

Rising oil prices will have an impact on countries like Sri Lanka which import all of its petroleum requirements. Moreover, Dr. Abeyratne said domestic policies have not changed from previous trends and that there is inflationary speculation now.

According to the Department of Census and Statistics (DCS), year on year inflation as measured by the Colombo Consumer Price Index (CCPI) decreased to 5.8% in April 2010 from 6.3% recorded the previous month. The 12 month moving average rate of inflation increased to 3.4% in April 2010 from 3.2% in March 2010.

The general price level decreased in April 2010 compared to the previous month. The DCS stated that this is the second time the CCPI has declined since August 2009. The CCPI for all items for April 2010 was 212.6 compared to 214.8 in March 2010. The decrease represents an expenditure value of Rs.385.23 in the market basket.

The DCS added that on a month to month basis, prices of food commodities decreased due to the high supply of agricultural consumer goods, particularly rive, vegetables and coconuts from the main producing areas. Items such as fish and seafood increased due to less supply from the main producing regions in April 2010. On average, the DCS noted that expenditure value on items in the food group decreased by Rs.388.88.

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