Sri Lanka Inflation Slows to 28-Month Low on Food Prices

Sri Lankan inflation slowed to a 28- month low as the cost of food and beverages dropped.

Consumer prices in the capital, Colombo, increased 2.7 percent from a year earlier after gaining 3.8 percent in January, the Department of Census and Statistics said on its website today. The median of six estimates in a Bloomberg News survey was for a 4 percent advance.

Sri Lanka raised fuel prices this month and allowed its currency to weaken to a record low, part of measures to curb demand for imports such as oil and shield currency reserves. The steps may cause inflation to accelerate, and the central bank on Feb. 3 increased interest rates for the first time since 2007 to contain credit growth.

“There is no need to raise rates again to cool inflation or support the currency, as that would hamper growth,” Sarath Rajapakse, director of research at Capital Trust Securities Pvt. in Colombo, said before the report.

Sri Lanka scrapped a trading band for the rupee on Feb. 9. The currency slid to 122.35 per dollar today, its weakest level against the U.S. currency. It has tumbled almost 7 percent so far this year, the most in the world after Iran’s rial. The Colombo All-Share Index has declined 10.2 percent in the period.

To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net

To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net

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