COLOMBO, June 4 (Reuters) - Sri Lanka’s central bank conceded on Wednesday that it will fail to meet its 2008 inflation target, blaming external pressures on domestic prices.
It had targetted inflation of between 10 percent and 11 percent by end of 2008, levels which financial markets have long factored in as unachievable.
“We will not be able to achieve 10-11 percent target by end of the year,” Nandalal Weerasinghe, the chief economist and director of the economic research department at the central bank told Reuters.
“We have been passing through the external shocks to domestic prices, unlike India or some other countries. They pass much less than ours. In that situation, I am sure, we will not be able to achieve this 10-11 percent target, because the situation has changed drastically.”
He declined to provide a fresh forecast for inflation.
“We have our internal numbers. We will publish them soon,” Weerasinghe said.
Countries globally are feeling the brunt of soaring oil and food prices.
The central bank’s original inflation estimate was based on average oil prices of $85-$90 per barrel.
However the oil prices have been over $90 per barrel since early February and hit a record high of $137 per barrel last month.
Sri Lanka’s annual inflation measured on a 12-month moving average hit 19.8 percent in May, up from 18.7 percent in April.
Consumer prices rose 26.2 percent in the year through May — the highest level recorded by the current index, which goes back to January 2003 — after climbing 25 percent in April. (Reporting by Shihar Aneez) ((email@example.com; +94-773-763-577; Reuters messaging; firstname.lastname@example.org))