Courtesy Adaderana

he Year-on-Year (Y-o-Y) inflation based on the Colombo Consumer Price Index (CCPI) decreased to 54.2% in January 2023 from 57.2% seen in December 2022, the Department of Census and Statistics reported.

Meanwhile, Y-o-Y inflation of Food Group has dropped to 60.1% in January 2023 from 64.4% in December 2022, it said quoting the latest data.

According to the department’s report, Y-o-Y Non-Food Group inflation decreased to 51% in January 2023 from 53.4% in December 2022.

The CCPI for all items for the month of January 2023 was 244.3 and it recorded an increase of 1.1 in index points which is 0.43 percentage compared to the month of December 2022 for which the index was 243.2.

The report said that Month on Month expenditure change was contributed by increases in Food and Non-Food categories of 0.23% and 0.20%, respectively.

Meanwhile, annual average inflation rose to 49.6% in January 2023 from 46.4% in December 2022.

The core inflation (Y-o-Y), which reflects the underlying inflation in the economy, decreased to 45.6% in January 2023 from 47.7% in December 2022, whereas annual average core inflation increased to 37.6% in January 2023 from 34.6% in December 2022.

The general price level has increased by 144.3% compared to the base year (2013).

The CCPI is an economic indicator constructed to measure inflation which is defined as percentage change in CCPI over the year. 

There are two measures of inflation in general use. One measure is Year on Year base or Point to Point inflation (The percentage change in the CPI during the last 12 months). The other measure is Moving Average Inflation (The percentage difference between the average Price Index of last 12 months & the average Price Index of previous 12 months).

In a statement in this regard, the Central Bank of Sri Lanka (CBSL) stated that looking ahead, based on its latest macroeconomic projections, the declining trend of inflation is expected to continue through 2023, supported by subdued demand conditions owing to tight monetary and fiscal policy measures, anticipated improvements in domestic supply conditions, and the expected passthrough of easing global energy and food prices to domestic prices, along with the favourable statistical base effect.

However, there are upside risks to this disinflation path arising from possible upward adjustments in domestic energy prices and any associated second round effects, delays in passing downward adjustments of global energy and food prices to domestic consumers, etc.

Nevertheless, factors such as the reduced purchasing power of the public could soften inflationary pressures, exerting downside risks to inflation projections.