ECONOMYNEXT – Sri Lanka’s inflation rose to 4.1 percent in the 12-months to December 2016, accelerating from 3.4 percent in November with prices rising 1.0 percent in during the month, data from the state statistics office said.
In December the food sub-index spiked 1.7 percent, while non-foods rose 0.4 percent.
In the full year food prices rose 3.8 percent and non-foods rose 4.4 percent.
Global inflation has been muted over the past two years with the US Fed gradually tightening monetary policy and sending the US dollar higher.
Though Sri Lanka’s rupee fell from around 145 to 150 during the year prices in the traded goods sector has not gone up much as a result of a stronger US dollar. In 2015 the rupee collapsed from 131 to 145 to the US dollar.
Domestic demand was also contained with the central bank keeping markets short of liquidity. Policy was only loosened in late November when the Central Bank started to inject cash permanently with outright purchases of Treasury bills. (Colombo/Dec30/2016)