Sri Lanka inflation falls to 10.7-pct

Jan 30, 2009 (LBO) – Inflation in the 12-months to January 2009 measured by the revised Colombo Consumer Price Index (CCPI) fell to 10.7 percent from 14.4 percent in December, the government’s statistics office said.

The moving average of the index, which is a lagging indicator, fell to 21.6 percent from 22.6 percent.

Sri Lanka had tight monetary policy until September 2008, but inflation rose in the first half partly due to loose monetary policy in late 2007 and high inflation imported through a dollar peg.

Domestic monetary policy loosened somewhat after September 2008 when the balance of payments turned negative amid sterilized peg defence of the currency.

In the 30 days to December inflation fell 0.3 percent with the index falling in absolute terms from 203.7 points to 203.1 percent, amidst a global deflationary environment.

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