Sri Lanka inflation jumps to 2.8pc in Nov

BENGALURU, Dec 22 (Reuters): Sri Lanka's consumer price inflation rate rose to 2.8 per cent year on year in November from 1 per cent in October, the statistics department said on Thursday.
The National Consumer Price Index (NCPI), which captures broader retail price inflation, is released with a lag of 21 days every month.
Food prices fell 2.2 per cent in November from 5.2 per cent in October on the year, the Department of Census and Statistics said in a statement.
Prices for non-food items, however, surged 7.1 per cent in November from 6.3 per cent year-on-year in October.
Sri Lanka racked up record high inflation last year after its economy was pummelled by the worst financial crisis in decades, triggered by a plunge in foreign exchange reserves.
Helped by a $2.9 billion bailout from the International Monetary Fund (IMF), inflation began to decline from June but is likely to increase from next month as Sri Lanka raises value added tax to 18 per cent from 15 per cent to meet revenue targets set by the global lender.
Targets to improve public finances, which included raising power prices by 18 per cent in October, have also hit inflation, analysts said, predicting inflation will end the year at about 5 per cent.
"The VAT increase in January will increase inflation by about 2 per cent-3 per cent as items such as fuel, which were earlier exempted will now be included," said Dimantha Mathew, head of research at First Capital.
"We expect inflation to hit about 8 per cent by June next year."
The Central Bank of Sri Lanka (CBSL) last month said it would suspend its monetary policy easing in the medium term after slashing interest rates by 650 bps since June to boost growth.
It has set an inflation target of 4 per cent-6 per cent in the medium term.
Sri Lanka's economy is expected to contract by 3.6 per cent this year, according to the IMF, after shrinking 7.8 per cent in 2022.
Full-year growth will return next year, with the Sri Lankan economy projected to grow 1.8 per cent.