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Sri Lanka inflation in January 2020 rises to 5.4-pct

ECONOMYNEXT – Inflation in Sri Lanka capital picked up to 5.4 percent in the 12-months to January 2020, with the index gaining 1.4 percent during the month, data from the state statistics office showed.

The Colombo Consumer Price Index, which measures price levels in Sri Lanka’s capital Colombo, rose to 134.3 points in January from 132.4 points in December.

The food price index surged 11.7 percent with many traded commodities and domestically produced foods rising.

Food prices usually rise in December and January, with a seasonal expansion in money supply accommodating prices and ahead of the main harvest season which starts in February.

In January 2019 however the food index fell 2.1 percent amid tight liquidity maintained to stop a currency collapse, triggered by cash injections earlier in the year.

The central bank cut its policy rate at which cash is injected into banks to 7.5 percent in January from 8.0 percent saying the price rises came mostly from ‘food inflation’ which would go away.

The monetary authority practices ‘flexible’ inflation targeting and tends to cut rates at different inflation levels. (Colombo/Jan31/2020)

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