Headline inflation above 6% in January 2024

On year-on-year basis, headline inflation increased to 6.4 per cent in January 2024 from 4.0 per cent in December 2023. Further, the Food inflation recorded 3.3 per cent, while the Non-Food inflation recorded 7.9 per cent. Furthermore, the CCPI based core inflation increased to 2.2 per cent in January 2024 from 0.6 per cent in December 2023 according to the Weekly Economic Indicators report of the Central Bank of Sri Lanka.

The report further said:

In December 2023, Purchasing Managers’ Index for Construction, as reflected by the Total Activity Index, recorded a value of 48.6, indicating a contraction in construction activities on a month-on-month basis.

During the period under review (27.01.2024 to 02.02.2024), crude oil prices exhibited a declining trend. Crude oil prices fell mainly on demand concerns stemming from low economic activity in China and on prospects of easing of geopolitical tensions in the Middle East. Overall, both Brent and WTI prices decreased by more than US dollars 4.00 per barrel during the period under review.

The average price of tea in the Colombo auction decreased to US dollars 3.66 per kg in December 2023 from US dollars 4.05 per kg in December 2022. The average import price of crude oil increased by 0.6 per cent (year-on-year) to US dollars 97.62 per barrel in December 2023.

Weekly Average Weighted Prime Lending Rate (AWPR) for the week ending 02nd February 2024 decreased by 34 bps to 11.91 per cent compared to the previous week.

Broad money expanded by 7.3 per cent, on a year-on-year basis, in December 2023. Net Credit to the Government from the banking system increased by Rs. 562.5 bn in December 2023. Outstanding credit to public corporations decreased by Rs. 355.6 bn in December 2023. Outstanding credit extended to the private sector increased by Rs. 102.6 bn in December 2023.The outstanding stock of T-Bills and T-Bonds held by foreigners increased by 1.63 per cent in rupee terms during the reporting week compared to the week before.