Sri Lanka inflation accelerates to 5.8-pct in September

Sept 30, 2010 (LBO) – Consumer prices in Sri Lanka’s capital Colombo rose 5.8 percent in September from a year earlier, accelerating from 5.0 percent in August, the government’s statistics office said. “What is important here is that we have not only been able to deal with inflation, but we have also been able to deal with the inflation expectations, which is actually a lot more difficult to deal with than inflation itself,” he said.

“Now that it has been dealt with and people have begun to see a credible situation here we would be in a position to relax it. That is why we have made certain relaxations in our monetary policy which has definitely stimulated growth.”

The government delayed a state sector wage hike till next year, helped by low inflation generated by the central bank in the recent past. However trade union action is increasing, with the opposition Marxist Janatha Vimukthi Peramuna calling for an 8,000 rupee salary hike.

Protein prices, including chicken and fish have been rising steeply, though it may be related to backfiring government intervention in agricultural markets and autarkic policies aimed at increasing ‘self sufficiency,’ which has created high and volatile grain