July 31, 2008 / 3:44 AM / 11 years ago

RPT-PREVIEW-Sri Lanka's inflation seen at 21.5 pct in July

 (Repeats ahead of data)
 * What: July consumer price index
 * When: Thursday, July 31, about 3:00 pm (0930 GMT)
 * 12-mth average seen at 21.5 pct vs June's 21.0 pct
 By Shihar Aneez
 COLOMBO, July 30 (Reuters) - Sri Lanka's inflation
<LK/INFL1>, as measured on a 12-month moving average, is
expected to have accelerated in July to its highest in more
than five years due to an increase in food prices.
 The median forecast of nine analysts predicted the new
consumer price index had risen to 21.5 percent in July, the
highest reading for the index and above 21.0 percent in June.
 From a year earlier, consumer prices are forecast to have
risen 28.0 percent, edging down from a 28.2 percent rise in
June.
 "Food prices have increased compared to a year earlier,"
said Geeth Balasuriya, assistant research manager at HNB
Stockbrokers. "However, we see a slow down in the rate of
increase in food prices this month compared to June, due to
better supply."
 Food has a weighting of 45.5 percent in the new index.
 Central Bank Governor Ajith Nivard Cabraal told Reuters in
an interview early this month that inflation would not moderate
as the central bank had expected and at year-end would be much
higher than the targeted 10-11 percent but not over 20 percent.
 He blamed high global food and oil prices for high
inflation in the $27 billion economy.
 In its July monetary policy review, the central bank kept
its key interest rates steady for the 17th straight month.
 But it cut its annual average reserve money target to 11.75
percent from 12.5 percent to curb high money supply in the
economy.
 The overnight repurchase rate stands at 10.5 percent and
the reverse repurchase rate at 12 percent.
 Both rates are at their highest levels since 2002, but well
below T-bill rates, which commercial banks use as a reference
for their own lending rates instead of the official rates.
 The Census and Statistics Department introduced the new
index formally from December, with 2002 as the base year,
saying the old measure did not reflect the consumption pattern
of households.
 CCPI (N) (New Index, pct)  12-Mo Average        vs year
ago
-----------------------------------------------------------
 Median                           21.50                28.00
  Average                          21.38               27.67
  Low                              20.50             
 23.20      High                             22.20            
  30.00      Number of banks                      9
    9      Note: The following banks participated in the
poll: Commercial Bank of Ceylon, HSBC, Standard Chartered Bank,
Citibank, National Development Bank (NDB) Nations Trust Bank
(NTB), Hatton National Bank (HNB), Bank of Ceylon, and People's
Bank.
  (Editing by Mark Williams)

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