Sri Lanka inflation up 6.8-pct in June 2013

June 28, 2013 (LBO) – Sri Lanka consumer prices rose 6.8 percent in the 12-months to June 2013, slowing from 7.3 percent in May, but prices rose 1.3 percent during the month, data from the state statistics office showed. The annual rate fall came from a so-called statistical base effect as last June’s inflation also rose 1.9 percent.

In May there was a sharp 2.3 percent increase in the widely watched Colombo Consumer Price Index.

In June the food and non-alcoholic beverages sub index rose 3.2 percent and was up 7.3 percent for the year.

Sri Lanka’s central bank cut policy rate from May 2013 but raised petroleum prices, which will reduce losses of state enterprises and cut credit demand in the coming months.

In June the rupee also fell and last week the Central Bank cut its statutory reserve ratio, which could put further pressure on the rupee unless the liquidity released by the move is mopped through dollar or bond sales in the Central Bank’s portfolio.

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