Sri Lanka's inflation, as measured by the change in the Colombo Consumers' Price Index, declined significantly to 4.7 percent in December 2013 from previous month's 5.6 percent on a year-on-year basis, the Central Bank reported on Tuesday.
Inflation, which was contained within single digit levels for nearly five consecutive years, stabilized at mid-single digit levels in December 2013. This is the longest period that inflation has remained at single digit levels, after the economy was liberalized, the Central Bank said.
The inflation for December reached the lowest level recorded since March 2012, according to the Central Bank figures.
Consequently, the annual average rate of inflation also decelerated further to 6.9 per cent in December 2013, for the seventh consecutive month.
The Central Bank attributed the sharp deceleration of inflation in December to moderation in prices of mainly non-food category, which grew only by 6.1 percent in 2013 against that of 10.0 percent in 2012.
The impact of the upward price revision of petrol, diesel, kerosene and bus fares on inflation was lower in 2013 than in 2012.
However, relatively high increase in the Food and non-alcoholic beverages category by 7.9 percent in 2013 compared to 2012 had an upward pressure on inflation.
Consumer prices remained unchanged in December from the previous month and on absolute terms the CCPI index remained at176.5.
Core inflation, which captures underlying long-term trend of inflation, has also moved on a declining path in 2013 to record the lowest figure since its inception in 2007, the Bank said.
The Central Bank says the continued low level of core inflation is a result of prudent monetary management by the monetary authority, which has been implemented successfully in containing price pressure emanating from the demand side.