Sri Lanka inflation rises above forecast for March, trade deficit contracts

Mar 31, Colombo: Sri Lanka’s inflation as measured by consumer prices in Colombo rose to a 26-month high of 8.6 percent for the month of March while the trade deficit contracted for January, the figures released by the Statistics Department of the Central Bank today showed.

The year-on-year inflation increased above estimates to 8.6 percent in March from a 7.8 percent in February while the Colombo Consumer Price Index marginally decreased to 233.2 points from previous month’s 233.9 points.

The annual average inflation increased marginally to 6.2 percent in March from 6.1 percent in February, mostly as a result of the supply-side pressure, according to the Central Bank.

Earnings from exports in January this year increased by 72.4 percent year-on-year, to US dollars 813 million while expenditure on imports increased by 21.3 percent to USD 1.5 billion during the same period.

The Central Bank attributed the increase in export earnings to the significant increases in exports of textile and garments and rubber products.

The increase in expenditure was mainly due to increases in imports of motor vehicles, electrical equipment and transport equipment, the Bank reported.

Accordingly, the trade deficit in January 2011 has contracted by 10.2 percent, year-on-year, to USD 688 million.

During January 2011, workers’ remittances increased by 20.1 percent over that of 2010 to USD 377 million.

According to the Central Bank, the gross official reserves continued to remain above the targeted level at USD 6.7 billion by end February 2011 equivalent to 5.8 months of imports.

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