Communications Department

28.02.2023

CCPI based headline inflation eased in February 2023

Headline inflation, as measured by the year-on-year
Inflation January February
(Y-o-Y) change in the Colombo Consumer Price Index CCPI (2021=100) 2023 2023
(CCPI, 2021=100)1 decreased to 50.6% in February 2023
Index Value 188.6 189.5
from 51.7% in January 2023. The decline in the headline
inflation is broadly in line with the disinflation path Monthly Change (%) 0.5 0.5
envisaged by the Central Bank of Sri Lanka (CBSL) in
Y-o-Y Inflation (%) 51.7 50.6
January 2023.

The Food inflation (Y-o-Y) decreased to 54.4% in Contribution to Monthly % Change in

% CCPI (2021=100)
February 2023 from 60.0% in January 2023, whereas the 1.5
Non-Food inflation (Y-o-Y) increased to 48.8% in 0.47
1.0
February 2023 from 47.9% in January 2023. Monthly 0.54
change of CCPI recorded at 0.47% in February 2023 due 0.5 0.29 1.20
to price increases observed in items of Non-Food 0.0
0.25
category, which was 1.20%. However, the Food category -0.74
-0.5
recorded a monthly decline of 0.74%. The core inflation
(Y-o-Y), which reflects the underlying inflation in the -1.0
Jan-23 Feb-23
economy, decreased to 43.6% in February 2023 from
45.6% in January 2023. Food Non-Food

Looking ahead, based on the latest macroeconomic projections of the CBSL and available information, the
anticipated declining trend of inflation is expected to continue through 2023, supported by subdued demand
conditions owing to tight monetary and fiscal policy measures, and anticipated improvements in domestic
supply conditions, along with the favourable statistical base effect.
Headline Inflation Projections2
CCPI, 2013=100, quarterly average, y-o-y, %
2020:Q4 2021:Q4 2022:Q4 2023:Q4 2024:Q4
90 0 The inflation fan chart depicted here illustrates the
uncertainty surrounding the baseline projections using
confidence bands of gradually fading colours. Given the
60 -30 prevailing domestic and global economic uncertainties
and geopolitical tensions, the risks associated with the
current projections are much higher than in normal
30 -60
times. In particular, there are upside risks to baseline
projections arising from possible second round effects
of the recent electricity tariff increase, any upward
adjustments in other utility and energy prices, possible
0 -90 deviation of expected fiscal consolidation path, etc.
Nevertheless, the substantial deterioration of the
purchasing power of the public could offset some
-30 -120 upward pressures on inflation, exerting downside risks
2020:Q4 2021:Q4 2022:Q4 2023:Q4 2024:Q4 to its projections.
90% CI 70% CI 50% CI Realised Inflation (CCPI, 2021=100):
Jan and Feb 2023 Source: Central Bank Staff Projections

1 Compilation of Colombo Consumer Price Index (CCPI, 2013=100) is discontinued and replaced by CCPI (2021=100) since February 2023. The Colombo
Consumer Price Index (CCPI, 2021=100) is compiled by the Department of Census and Statistics (DCS) to indicate average changes in the prices of goods
and services purchased by households in urban areas of Colombo district.

2 The projections displayed in the fan chart reflect the available data, and assumptions and judgements made at the January 2023 forecast round. The realised
inflation numbers, depicted by the red dots, are based on the new base year series (CCPI, 2021=100), whereas the fan chart and historical data are based on
the old base year series (CCPI, 2013=100), which has resulted in a noticeable shift in realised inflation compared to the projections given in the fan chart. The
Central Bank revises its medium-term inflation projections on a quarterly basis, along with the release of GDP estimates by the DCS. Accordingly, the fan
chart will be updated during the April 2023 forecast round, using latest available information, including rebased inflation and 2022 Q4 GDP data.
 CCPI (2021=100) based Headline Inflation by Subcategory (Y-o-Y % Change)

50.6
Headline Inflation 51.7

92.7
Transport 94.5

81.4
Clothing and Footwear 80.5

69.2
Restaurants and Hotels 72.1

58.5
Miscellaneous Goods and Services 61.7

57.4
Recreation and Culture 58.1

Furnishing, Household Equipment and Routine 55.0

Household Maintenance 57.0

54.4
Food and Non Alcoholic Beverages 60.0

45.1
Health 44.7
February-2023
44.7
Alcoholic Beverages and Tobacco 44.4 January-2023
34.1
Education 33.8

34.0
Communication 34.0

24.3
Housing, Water, Electricity, Gas and Other Fuels 20.7

0 20 40 60 80 100

Movement of the CCPI (2021=100)

Period Index Number Monthly % Change Y-o-Y % Change

CCPI CCPI CCPI

Year Month CCPI CCPI CCPI
(Core) (Core) (Core)
2022 January 124.3 118.4 - - - -
February 125.8 120.0 1.2 1.4 - -
March 129.7 123.6 3.1 3.0 - -
April 142.1 134.2 9.6 8.6 - -
May 153.6 142.2 8.1 6.0 - -
June 171.7 154.7 11.8 8.8 - -
July 178.9 160.9 4.2 4.0 - -
August 182.8 163.6 2.2 1.7 - -
September 189.3 168.8 3.6 3.2 - -
October 188.5 170.4 -0.4 0.9 - -
November 187.1 171.1 -0.7 0.4 - -
December 187.6 171.5 0.3 0.2 - -
2023 January 188.6 172.4 0.5 0.5 51.7 45.6
February 189.5 172.3 0.5 -0.1 50.6 43.6
Source: Department of Census and Statistics