Sri Lanka inflation rises in August after falling for five months

Sri Lanka's rate of inflation, on a year-on-year basis, rose to 5.0 percent in August 2010 after falling for five consecutive months as consumer spending in the country has increased in parallel to the rising global commodity prices
.Figures released Tuesday (August 31) by the Central Bank's Statistics Department showed that the annual average inflation increased marginally to 4.5 percent in August from 4.2 percent in the previous month. The Consumer's Price Index increased 0.46 percent to 218.6 in August.

The Central Bank last month reduced its Reverse Repurchase Rate by 50 base points to 7.25 percent while keeping the Repurchase Rate unchanged taking advantage of the low inflation rate in the country to stimulate economic growth. The Bank expects the inflation rate to remain in single digits for the remainder of the year.

The monetary authority expects the domestic credit conditions to continue to ease in line with its policy direction, to support the revival in economic activity currently underway.

Citing economic growth and stability, the International Monetary Fund (IMF) in July approved a US$ 407.8 million disbursement to Sri Lanka as the third tranche of a US $ 2.6 billion Stand-By-Agreement approved in July 2009.

Overall economic conditions in Sri Lanka are improving and the economy is likely to show strong growth this year, the international lender said.