ECONOMYNEXT – Sri Lanka’s nation-wide inflation measured by the National Consumer Price Index, slowed to 5.2 percent in November 2020 from 5.5 percent in October data from the state information office showed.
Sri Lanka’s central bank targets inflation between 4-6 percent despite the level creating several currency crises in the recent past.
The National Consumer Price Index however grew by 0.5 points to 139.8 points during the month of November.
The index had been growing steadily since June, though a demand collapse from lockdowns stabilized the currency, despite money printing. Credit has started to pick up in the last quarter of 2020.
Food prices picked up 0.8 percent in the month, while non-foods 0.2 percent.
Sri Lanka reduced the component of foods in the inflation index about a decade ago.
Food and traded commodities, where there is greater price discovery, respond faster to bad monetary policy, which had made money printing central bank remove them from indices and focus on a ‘core inflation’ where the effects are delayed.
The focus on core inflation, critics say was a factor behind the bubble leading up to the Great Recession. (Colombo/Dec22/2020)