May 26, 2008 (LBO) – Sri Lanka’s central bank said inflation would be higher than targeted in 2008, as the monetary authority found it difficult to counter pressures from rising commodity prices, especially oil. “In the circumstances there is a strong likelihood of the actual 2008 inflation being significantly higher than the previous estimates..,” the Central Bank said in its May monetary policy review.
The previous estimate of 11 percent, was based on oil prices being around 90 US dollars a barrel. The Central Bank said at the time higher oil prices may mean inflation of around 14 percent for 2009.
In April Sri Lanka’s inflation rose to 25.0 percent as measured by the New Colombo Consumers’ Price Index while an older index showed inflation at 29.9 percent.
“The continuous rise in international commodity and oil prices as well as domestic supply constraints, caused a higher than expected increase in inflation during the month,” the Central Bank said.
“The rapid surge in global crude oil prices as well as the high prices of other commodities has led to persistent inflation pressures world-wide.” Central Bank says the increase of fuel prices may push the index up further, though it would redu