June 30, 2008 (LBO) – Sri Lanka consumer inflation in the capital Colombo accelerated to a new record of 28.2 percent in June 2008, from 26.2 percent in May, the government’s statistics office said. In the 30 days to June prices rose 3.7 percent in the most widely watched Colombo Consumer Price Index (CCPI).
The government changed the weights of the index and its base year after inflation hit 29.9 percent in April.
Sri Lanka’s inflation had been spiking since the middle of 2007 amidst loose monetary policy. The island has the highest inflation in Asia with only Vietnam coming close.
Many Asian nations, which maintain soft pegs with the US dollar, have been experiencing inflation of around 8 to 10 percent amidst steep rate cuts by the US Federal Reserve which have sent commodity prices rocketing.
Though the central bank has tightened monetary policy in 2008, analysts say the institution’s actions have been blunted by a policy interest rate far below inflation at 12.0 percent.
The central bank has said inflation may trend down in the second half.