Nov 02, Colombo: Sri Lanka's core inflation, which captures underlying long-term trend of the inflation, has continued its declining trend in terms of both year-on-year and annual average basis over the last few months, the Central Bank said.
The year-on-year core inflation which was over 7 percent during the first two months of the year, decelerated to 2.6 per cent in October 2013, reaching the lowest rate ever recorded since its introduction in 2007.
Core inflation is computed by excluding the items that have short term volatile prices from the basket of the Colombo Consumers’ Price index (CCPI 2006/07=100).
Meanwhile, the annual average core inflation also decreased continuously to reach 5.3 percent in October 2013 for the fifth successive month as compared to 6.4 percent in June 2013.
The slight increase of 1.4 percent in the price increases in non-food category contributed mainly to the decline in the year-on-year core inflation in October 2013.
"The favorable movement observed in the core inflation is a reflection of the effectiveness of prudent demand management policies of the Central Bank which have been successful in containing the underlying core inflation," the Bank said in a statement.
With the favorable outlook for domestic demand and supply conditions and the absence of upward pressures from international commodity prices, the Central Bank expects the core inflation to remain subdued during the rest of the year as well.