Sri Lanka’s inflation rate climbs to 17.7% in June

June 30, 2006 (LBO) – Sri Lanka’s inflation rate for June jumped to 17.7 percent, official figures showed Friday, spurring concerns that the Central Bank may hike interest rates again. The bank, which is forecasting a year-end growth of 7.0 percent said the economy would remain vulnerable an upsurge in violence, as sporadic attacks on military positions have left over 800 people dead since last December. Higher prices of kerosene, dried fish, eggs, potatoes and vegetables drove inflation to 17.7 percent from 13.2 percent in May, the Census and Statistics Department said.

On 12 month moving average inflation for June rose to 10.1 percent from 8.8 percent in May.

The twelve month moving average is usually taken as the official inflation figure by the government.

However, prices of sugar, coconut oil, fresh fish and coconuts fell marginally during the month, the statement said.

As a result the Colombo Consumer Price Index or CCPI rose to 4730.5 in June over 4553.1 recorded in May.

The increase fanned speculation about more rate tightening.

Earlier this month, the Central Bank unexpectedly raised key interest rates by a quarter-point after a five month lag,