PREVIEW-Sri Lanka inflation seen at 42-month high in July

* Weak rupee, price hikes, drought driving
inflation-analysts
* Cenbank expects easing in inflation on govt price cuts
* Data expected on Tuesday, July 31 at 0930 GMT

COLOMBO, July 30 (Reuters) - Sri Lanka's annual inflation
rate may have accelerated to a 42-month high in July as a
drought pushed up local food prices and a weaker rupee
aggravated import bills.
Annual inflation is expected to have accelerated to 9.4
percent in July, its highest since January 2009, a Reuters poll
of 13 analysts showed. In June, prices rose 9.3 percent from a
year earlier.
"We will see the impact of the drought and rupee
depreciation in food prices this month, too," one analyst said
on condition of anonymity.
Food accounts for more than 40 percent of the basket of
items used to compile inflation figures.
Central Bank Governor Ajith Nivard Cabraal told Reuters last
week that annual inflation in July should come down after the
government reduced import taxes on certain foods, though it will
be not a substantial reduction.
The International Monetary Fund has said annual inflation
may rise to 9.5 percent this year and stressed the need for
Colombo to keep monetary policy focused on price pressures "for
the time being."
The global lender in its latest staff assessment report (link.reuters.com/juw69s)
said last week that the current monetary policy stance is
appropriate, and a tightening bias should be maintained in the
near term until further evidence of diminishing inflation
pressures and credit demand emerges.
The rupee has depreciated around 16 percent since
November, pushing up costs for the $59 billion economy, which
imports most essential food commodities as well as fuel.
Consumer goods accounted for 20 percent of last year's total $20
billion import bill.
The central bank in July kept its key policy rates unchanged
after raising them twice since February to two-year highs,
saying the spike in inflation was due to a lower base and that
the impact of the drought and earlier policy measures have been
yielding desired results.
Finance Ministry Secretary P.B Jayasundera last week said
inflation is likely to be in upper singl- digit level during the
next few months and will ease to 6 percent after six months.

Following is the poll's forecast for July inflation data due
to be released on Tuesday: (Inflation figures are in percent)
CCPI Index vs year ago 12-Mo Avg
Median 166.0 9.4 6.0
Average 165.7 9.2 5.9
Low 163.1 7.5 5.8
High 167.2 10.2 6.0
June figures 165.2 9.3 5.8
No. of contributors 13 13 13

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Kim
Coghill)