Inflation in Sri Lanka in March 2009 fell to 5.3 % on a point-to-point basis, the lowest in five years (since January 2004), the Central Bank said today.

This rate is as measured in Colombo Consumers’ Price Index (CCPI) and computed by the Department of Census and Statistics. “The inflation came to this low level from its continued deceleration for the last nine months from its peak of 28.2 recorded in June, 2008. The annual average inflation rate also decelerated further and recorded 18.6 % in March 2009 from its level of 20.3 % in the previous month,” the Bank said in a statement. The CCPI decreased by 0.4 % in March 2009 over February 2009. This was entirely due to the decline of 1.3 % in the Food and non-alcoholic beverages category.

However core inflation, on a point-to-point basis, rose marginally from 14.1 % in February 2009 to 14.2 % in March 2009 with the annual average rate also rising from 14.8 % to 15.2 %. “Headline inflation is expected to drop to reach a rate as low as 2-3 % by the middle of the year, as a culmination of the reaction to monetary policy and easing of commodity prices in the international market,” the statement said. It didn’t explain what core or headline inflation is.