Dec 04, 2008 (LBO) – Sri Lanka’s controversial ‘core’ inflation index, which the Central Bank says it uses for monetary policy decisions, was at 18.1 percent in November, overtaking the so-called ‘headline’ figure which is at 16.3 percent, the latest data shows. The Central Bank said the headline Colombo Consumers’ Price Index (CCPI) fell 16.3 percent in November from 20.2 percent in October with transport prices falling 3.1 percent, and housing, water and energy, falling 1.9 percent.
Prices of globally traded commodities, including oil and food, have gone through a long predicted ‘deflationary collapse’ caused by an inability of especially the US Federal Reserve bank to inject inflation to the global economy.
Though frantic attempts are under-way to ‘re-flate’ the global economy through rate cuts, and ‘quantitative easing’ (buying up dud assets to create new money) prices in financial and housing assets as well as commodities continue to slide.
Central bankers, politicians and economists, who said there was a ‘food crisis’ and an ‘energy crisis’ and a steep rise in global traded commodities and inflation was due to ‘cost push’ inflation are now nowhere to be seen.
Economic analysts with a firm grounding in class