Inflation drops to 3% in January 2021

Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100)1 decreased to 3.0% in January 2021 from 4.2%in December 2020.

This was due to the statistical effect of the high base prevailed during January 2020. Meanwhile, Food inflation (Y-o-Y) decreased to 6.8% in January 2021 from 9.2% in December 2020. Further, Nonfood inflation (Y-o-Y) decreased to 1.4% in January 2021 from 2.0% in December 2020.

The change in the CCPI measured on an annual average basis decreased to 4.3% in January 2021 from 4.6% in December 2020.

Monthly change of CCPI recorded at 0.51% in January 2021. This was due to price increases observed in items of both Food and Non-food categories. Moreover, monthly changes of Food and Non-food categories recorded at 0.29% and 0.22%, respectively, in January 2021.

Accordingly, within the Food category, prices of red onion, coconut and sea fish increased in January 2021. However, price of big onion recorded a decline during the month. Meanwhile, prices of items in the Non-Food category recorded an increase during the month mainly due to price increase observed in the Health (payments to private hospitals) sub-category.

The core inflation (Y-o-Y), which reflects the underlying inflation in the economy, decreased to 2.7% in January 2021 from 3.5% in December 2020. However, annual average core inflation remained unchanged at 3.1 per cent in January 2021.

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