Sri Lanka inflation reaches 4.2-pct in 2020 December

ECONOMYNEXT – Sri Lanka’s central bank has generated inflation of 4.2 percent in the 12-months 2020 as measured by the Colombo Consumer Price Index, which is within its target range of 4 to 6 percent, data from the state statistics office showed.

The 4.2 percent inflation was recorded despite printing money, amid weak private credit.

In the 12-months to November inflation measured by the Colombo Consumer Price Index was 4.1 percent.

The Colombo Consumer Price Index rose 0.7 percent during the month of December to 138.0 points from 137.1 points in November.

In November the 12-month inflation was 4.1 percent.

Food prices grew 9.2 percent during the 12-months.

Sri Lanka’s central bank has printed unprecedented volumes of money, but inflation has been muted, amid weak private credit in the middle of the year.

Food prices, which are frequently traded commodity where price discovery is faster, rose 9.2 percent in 2020.

Private credit started to pick up in the last quarter, and there had been steady outflow of liquidity through the financial account indicated in foreign reserve losses.

Sri Lanka’s rupee came under pressure in March 2020, but stabilized after intervention and a credit collapse. It ended the year around 185/186 to the US dollar after starting around 182 to the dollar. (Colombo/Dec31/2020)

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