Sri Lanka inflation accelerates to 1.1-pct in July

July 31, 2009 (LBO) – Consumer prices in Sri Lanka’s capital Colombo rose 1.1 percent in July from a year earlier, with the price index moving up 0.4 percent in the month, the government’s statistics office said. In June prices hit a low of 0.9 percent from a year earlier.

Prices fell in absolute terms for seven months running from October to April before reversing direction. Inflation showed up most in food prices.

The food and beverage price index, which is 46.7 percent of the index rose from 210.8 points in April to 222.1 points in July almost to the so called ‘food crisis’ levels seen last year. In June 2008 the food price index hit 222.0 points.

Global food prices have also been moving up, but Sri Lanka has ratcheted up taxes on most imported foods to ‘protect’ farmers, who already get fertilizer subsidies.

HSBC regional economist Prakriti Sofat says international commodity prices have also been moving up.

“History suggests that domestic food prices are highly related to international price movements given the high degree of food imports in the country,” Sofat said.

“The correlation of food infl