Sri Lanka’s Colombo Consumer Price Index up 2.2% year-on-year in March

Sri Lanka’s Colombo Consumer Price Index rose 2.2% year-on-year in March, after February’s rise of 1.6%, the Statistics Department said on Tuesday.

The Colombo Consumer Price Index, a leading indicator of broader national prices, tracks inflation in the island nation’s biggest city.

The annual inflation rate in the food category increased to 0.7% this month from 0.2% in February. In the non-food category, consumer prices rose 2.3%, last month versus 2.9% in February.

Sri Lanka, which imports all its fuel, is struggling with the fallout from the Middle East crisis that has driven up price of fuel by about 35% in March.

It also raised power tariffs for most households by 7.2% and industries by 8.7% on Monday, with the power regulator warning more hikes could be in store if energy prices continue to climb.

Sri Lanka central bank holds policy rate unchanged

“With the new energy prices, we may see inflation increase to about 3.3% across the next couple of months,” said Dimantha Mathew, research head at First Capital.

The Central Bank of Sri Lanka (CBSL) kept its key policy rate unchanged at 7.75% last week but warned that inflation was increasing faster and would reach 5% in the year’s second quarter.

A delegation from the International Monetary Fund (IMF) is visiting Colombo to review the fifth and sixth tranches of a $2.9-billion program that would release about $650 million to Sri Lanka.