Sri Lanka’s Sept core inflation picks up slightly, despite tightening
COLOMBO, Sept 30 (Reuters) – Sri Lanka’s core inflation picked up slightly in September, data from the Department of Census and Statistics showed on Friday, despite a rate hike by the central bank two months ago.
Core annual inflation, which excludes fresh food, energy, transport, rice and coconuts, rose 4.2 percent, accelerating from 4.1 percent the previous month. It hit a 38-month high of 6.6 percent in May.
The central bank raised its key monetary policy rates by 50 basis points in July, in a third tightening measure since December, to curb stubbornly high private sector credit growth.
It will take between 12 and 18 months to see the impact of the past tightening measures, central bank governor Indrajith Coomaraswamy said, after holding the policy rates steady in September.
The rise in core inflation is not alarming, said Shiran Fernando, an analyst at Colombo-based Frontier Research.
"It has been coming down compared to what it was in May and annual inflation is also coming down."
The International Monetary Fund (IMF) last week urged the central bank to stand ready for further tightening if inflation or credit growth rise.
Annual private sector credit growth in July stood at 28.5 percent, its highest since August 2012, but Coomaraswamy this week said the central bank expected the credit expansion rate to slow to 20 percent by the end of 2016.