Sri Lanka’s average inflation hits 17 year high, policy rates frozen

Sept 28, 2007 (LBO) – Sri Lanka held policy rates steady in September and pointed fingers at commodity prices as average inflation hit a 17-year high in the island and central bank credit to government zoomed to new highs. The 12-month moving average of the Colombo Consumer Price Index (CCPI) hit 17.5 percent, the highest seen since June 1991 when it hit 17.6 percent. In 1990 Sri Lanka's annual inflation hit 20.5 percent.

The 12-month increase in the index was up 17.3 percent with the month of September alone seeing a 1.1 percent jump. The 12-month increase was highest since January 2007.

Administered Prices

Central Bank said it managed to reduce inflation to 13 percent up to June 2007.

"However, the unexpected sharp increases in commodity prices in international markets as well as revision in administered prices caused the CCPI to surge again in July to 17.6 percent before it declined to 17.3 per cent in August and in September," the bank said in its September 2007 monetary policy statement.

In the first week of September India's inflation crashed to a five year low of 2.38 percent, after the Reserve Bank of India tightened monetary policy in the wake of a public outcry after inflation rose