COLOMBO (NewsRadio); The Central Bank of Sri Lanka says it expects the headline inflation to stabilise at around 5 per cent over the medium term.
The Central Bank said the Colombo Consumer Price Index based headline inflation decelerated significantly below the target to 1.3 per cent in September 2023 driven by declines in both food and non-food inflation.
Food items recorded deflation (year-on-year) for the third consecutive month in September 2023, while non-food inflation continued to moderate due to the easing of price pressures across many categories of the CCPI basket.
The Central Bank said the CCPI based core inflation (year-on-year), which reflects underlying demand pressures in the economy, also moderated further in September 2023, reinforcing the disinflation process.
However, the Central Bank said this disinflation process is expected to turnaround from September, with the dissipating impact of the favourable base, and converge towards the targeted level of inflation.
It added, if the planned upward adjustments to administratively determined prices and tariffs, including electricity, as well as any tax measures are implemented by the government, a short-lived upward movement in headline inflation beyond the target is likely in the near term.
Meanwhile, the headline inflation is expected to stabilise at the target rate of 5 per cent over the medium term as reflected by the latest projections of the Central Bank.