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Sri Lanka 12-month inflation slows to 4.0-pct in May 2020

ECONOMYNEXT – Sri Lanka’s 12-month inflation fell to 4.0 percent in May 2020 from 5.2 percent a month earlier but prices picked up 0.4 percent in the month, data from the state statistics office said.

The Colombo Consumer Price Index, the country’s most widely watched index climbed to 134.2 points in May from 133.6 points in April as the rupee fell steeply amid a unprecedented liquidity injections by the central bank.

Food price index picked up 1.3 percent to 144.1 in May from 142.2 in April, while the non-foods barely rose 0.1 percent.

Sri Lanka’s rupee fell sharply as the central bank printed money in March and April, while a Coronavirus crisis also led to a consumption downturn.

However Sri Lanka has imposed trade controls in a self-imposed import embargo on a series of items including foods.

Sri Lanka cut rates in March as private credit spiked triggering pressure on the currency, but credit is expected to slow in the coming months, while the deficit is expected to rise. (Colombo/May30/2020)