Colombo consumer price index up 2.1%

Sri Lanka’s Colombo consumer price index rose 2.1% year-on-year in November, after also rising 2.1% in October, the statistics department said.

The Colombo Consumer Price Index, which tracks inflation in Colombo, Sri Lanka’s largest city, is a leading indicator of broader national price trends.

The release of the data, originally scheduled for Friday, was postponed after Cyclone Ditwah struck the island nation last week. It has so far killed 355 people and caused the worst floods in a decade.

“We anticipate the floods to have a near-term impact on food prices, which would reflect in readings of December and January. However, that is not likely to materially change our view of around 3% inflation target for the end of this year,” said Shehan Cooray, head of research at HNB Stockbrokers.

Sri Lanka has made a robust recovery since plunging into a financial crisis due to a record dollar shortage three years ago, posting economic growth of 5% last year.

The island nation’s inflation rate has also slowed significantly over the last two years, allowing official interest rates to come down gradually.

The annual inflation rate for the food category came in at 3% in November, down from 3.5% in October. In the non-food category, consumer prices rose 1.7% year-on-year last month, up from 1.4% in October.

Raynal Wickremeratne, co-head of research at Softlogic Stockbrokers, sees December inflation ticking up to 3%-3.5% versus a pre-flood expectation of 2.7%. But he said any impact would be transient.

“(The floods) are only a speed bump in the road, and should not be compared with events like a COVID pandemic and (the) 2022 economic crisis,” Wickremeratne added.