Saturday, 24 April 2021 10:22

Sri Lankans live above means in the midst of inflation rising in March Featured

Sri Lanka has been living above its means, but prognoses look promising. Inflation is expected to level off around five percent, as is government expenditure at around 20 percent of GDP.

Debt is still rising, of course, but trade seems in good shape, as well, with exports increasing, lowering the trade deficit. All in all, it looks like investing in infrastructure may pay off after all.

Headline inflation as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100) increased to 5.1 per cent in March 2021 from 4.2 per cent in February 2021.

This was due to the statistical effect of the low base prevailed in March 2020. Meanwhile, Food inflation (Y-o-Y) increased to 8.8 per cent in March 2021 from 6.9 per cent in February 2021 and Non-Food inflation (Y-o-Y) increased marginally to 2.0 per cent in March 2021 from 1.9 per cent in February 2021.

The change in the NCPI measured on an annual average basis decreased to 5.3 per cent in March 2021 from 5.5 per cent in February 2021.

Monthly change of NCPI recorded at -0.48 per cent in March 2021 due to price decreases observed in items of Food category. Moreover, monthly changes of Food and Non-food categories recorded at -0.63 per cent and 0.16 per cent, respectively in March 2021.

Accordingly, within the Food category, decreases were observed mainly in the prices of vegetables, green chilli and red onion during March 2021.

Meanwhile, prices of items in the Non-Food category recorded an increase during the month mainly due to price increase observed in the Restaurants and Hotels sub-category.

Further, year-on-year core inflation increased to 4.3 per cent in March 2021 from 4.1 per cent in February 2021, while annual average core inflation increased marginally to 4.3 per cent in March 2021 from 4.2 per cent in February 2021.

 

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