The headline inflation up to 6.2% in August

Issuing the National Consumer Price Index (NCPI), for the month of August 2020, the Director General of Census and Statistics said that headline inflation as measured by the Year-on-Year change (The percentage change in the current month NCPI over same month NCPI of last year) based on the NCPI has been compiled as 6.2%. The headline inflation reported for the month of July2020 was 6.1%. Contributions to the inflation rate of August 2020 from food group and non-food group are5.7% and0.6% respectively. Whilst contributions of food and non-food groups to the inflation in August2019 were 0.3% and 3.1% respectively,resulting in a headline inflation of 3.4%.With respect August 2019, the reported increase in percentage of food group was mainly due to higher price levels prevailed in this month of August 2020, particularly prices of coconuts, rice,turmeric powder,coconut oil,sugar andfresh fish.

Comparing the month-on-month changes, NCPI in August 2020 has increased to 137.8 from 137.3 reported in July 2020. This shows an increase of 0.5 index points or 0.4 percentage as compared to July 2020. The month-on-month change was contributed by increases of index values of food items by 0.24% and non-food items by 0.15% respectively.

Priceincreases of food itemswere reported for Vegetables, Turmeric powder, Coconuts, Big Onions, Fresh fruits, Eggs, Biscuits, Mysore dhal, Papadam and Rice flour. However, decreases in index values were reported for Coconut oil, Limes, Red Onions, Potatoes, Rice, Fresh fish, Dried fish, Green Chilies, Curry powder and Dried chilies.

The increases in index values of non-food groups in August 2020 compared to the previous month was due to the price increases in groups of items ‘Alcoholic Beverages, Tobacco & Narcotics’ (Arecanuts and Bulathwita),‘Clothing and Footwear’,‘Furnishing, Household equipment Routine household maintenance’, ‘Recreation and Culture’, ‘Restaurants and Hotels’ and ‘Miscellaneous Goods and Services’.However, price decrease in group of items was reported for ‘Health’ (Payments to medical laboratory tests). Further, very slight price increase was reported in group of ‘Housing, Water, Electricity, Gas and Other fuels’compared to the preceding month. Meanwhile, the price indices of ‘Transport’, ‘Communication’, and ‘Education’ groups remained unchanged during the month.

Core inflation, which reflects the underlying inflation by excluding volatile items of food, energy and transport groups in the economy as measured by the Year-on-Year change based on NCPI for the month of August 2020 has increased to 4.6% from 4.5% in July 2020.

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