Dec 31, Colombo: Sri Lanka's annual inflation fell to an 18-month low of 14.4 percent in December from a record high of 28.2 in June, data released by the Department of Census and Statistics today showed.

Consumer prices rose since June 2007 from 13.5 percent to a record high of 28.2 in June this year. The rate fell to a 16.3 percent in November, the statistics revealed.

Central Bank credited the downward trend to falling prices of food and fuel and to its tight monetary policies. The Bank expects the inflation to drop even further to single digits by the middle of next year with the efforts by the government to stimulate the economy.

The government yesterday unveiled an economic stimulus package of 16 billion rupees that included reducing fuel prices and concessions to industrial sector.

Financial analysts in Colombo say the government is taking steps in the right direction to stimulate the growth in economy. They expect the cut in fuel prices to ease the inflation paving the way for the Central Bank to cut interest rates.