Jump to content
View in the app

A better way to browse. Learn more.

கருத்துக்களம்

A full-screen app on your home screen with push notifications, badges and more.

To install this app on iOS and iPadOS
  1. Tap the Share icon in Safari
  2. Scroll the menu and tap Add to Home Screen.
  3. Tap Add in the top-right corner.
To install this app on Android
  1. Tap the 3-dot menu (⋮) in the top-right corner of the browser.
  2. Tap Add to Home screen or Install app.
  3. Confirm by tapping Install.

Sri Lanka Inflation Holds Near 4-Month High in August

Featured Replies

  • கருத்துக்கள உறவுகள்

Sri Lanka Inflation Holds Near 4-Month High in August (Update1)

By Anusha Ondaatjie

Aug. 31 (Bloomberg) -- Sri Lanka's consumer prices rose in August at close to the fastest pace in four months, presenting a challenge to the central bank which wants to damp inflation amid slowing economic growth.

Consumer prices in the capital Colombo rose 17.3 percent from a year ago, after increasing 17.6 percent in July, the Department of Census & Statistics said on its Web site. The median estimate of nine analysts in a Bloomberg survey was for a 17.3 percent gain.

The Central Bank of Sri Lanka has held interest rates at the highest level in Asia for six straight meetings as it tries to nudge inflation below 10 percent. Higher borrowing costs and escalating violence between government forces and Tamil separatists have weakened the $26 billion economy, which expanded in the first quarter at the slowest pace in two years.

``There is no chance of a rate reduction even with growth concerns,'' said Romesh Gomez, a trader at First Capital Treasuries Ltd. in Colombo. ``The central bank will need to keep a tight guard with continued inflation pressures.''

Sri Lanka's economy expanded 6.1 percent in the three months to March from a year earlier, the central bank said June 29. Gross domestic product estimates for the second quarter are scheduled for release next month. Citigroup Inc. expects growth to slow to 6 percent this year from 7.4 percent in 2006.

Depreciating Currency

The central bank yesterday said the recent decline in the rupee to consecutive record lows was unwarranted amid rising remittances and fund inflows. A depreciating currency has increased import costs.

The government this month reduced taxes on the import of wheat flour, sugar and potatoes to check consumer prices. Sri Lanka also replaced levies such as value-added tax and port charges on 15 essential commodities, including milk food, dried fish and onions, with a single, lower tax.

Sri Lanka will freeze diesel prices and electricity and water tariffs for the rest of this year, the state-run Daily News reported on Aug. 7, citing Prime Minister Ratnasiri Wickramanayake's office.

State-owned Ceylon Petroleum Corp. and Lanka IOC Ltd., the local unit of Indian Oil Corp., on July 29 lifted fuel charges for the fourth time in two months due to higher global oil costs.

The central bank on July 3 said it will continue with steps to tame inflation to a ``single digit'' by the end of 2007.

Money Supply

The bank's three rate increases between September and February helped slow inflation from a decade high of 20.5 percent in January. Inflation has been easing as higher borrowing costs damp money supply and loan growth.

Reserve money, one of the factors that fuels inflation, grew to 247.2 billion rupees in July, slower than the targeted 253.8 billion rupees, the central bank said on Aug. 2.

Inflation will ease to 9 percent by year end, central bank Governor Nivard Cabraal said in an April 30 interview, higher than an earlier forecast of as much as 8 percent.

Sri Lanka's economy will quicken in the second half of 2007 as inflation slows, Cabraal said on July 25.

Military spending has swelled 44 percent this year to a record after the collapse of a 2002 cease-fire.

To contact the reporter on this story: Anusha Ondaatjie in Colombo, Sri Lanka at anushao@bloomberg.net

Last Updated: August 31, 2007 06:02 EDT

http://www.bloomberg.com/apps/news?pid=206...amp;refer=india

Archived

This topic is now archived and is closed to further replies.

Important Information

By using this site, you agree to our Terms of Use.

Configure browser push notifications

Chrome (Android)
  1. Tap the lock icon next to the address bar.
  2. Tap Permissions → Notifications.
  3. Adjust your preference.
Chrome (Desktop)
  1. Click the padlock icon in the address bar.
  2. Select Site settings.
  3. Find Notifications and adjust your preference.