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Central Bank says inflation is on target despite food price pressures

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Dr. Chandranath Amarasekara, Director of Economic Research at the Central Bank of Sri Lanka

by Sanath Nanayakkare

While it is correct to say that the cost of living is rising particularly in terms of food prices, the Central Bank observes that inflation is well anchored broadly within the target range of 4-6 per cent, Dr. Chandranath Amarasekara, Director of Economic Research at the Central Bank of Sri Lanka told the Island Financial Review (IFR) yesterday.

IFR put this query to the Central Bank as many people are often heard complaining about rising food prices adding that there is no mechanism in place to stem it. A consumer in Delgoda told this reporter that a grocery retailer who offers best prices in the area sells Nipuna Samba at Rs.117.50 a kilo, white sugar at Rs.126 a kilo, brown sugar at Rs. 134 a kilo and canned fish Mackerel at Rs. 260 and edible B-onion at Rs. 250 a kilo though the gazetted (regulated) prices for these essential food items are much lower than that. He had bought turmeric curry powder at Rs. 300 per 100grams.

“As you have observed, cost of living is rising though non-food prices are rising slowly. Maintaining inflation in the target range does not mean that cost of living does not increase”. Dr. Amarasekara said.

Elaborating on what he termed as a nationally important subject, he said, “The Central Bank observes that inflation is well anchored broadly within the target range of 4-6 per cent. Year-on-year inflation based on the Colombo Consumer Price Index (CCPI) was at 4.8 per cent at end 2019 and remained at 4.0 per cent by October 2020. Year-on-year inflation based on the National Consumer Price Index (NCPI), which was at 6.2 per cent at end 2019, remained higher at 6.4 per cent by September 2020”.

“The above figures show that there is indeed inflation, displaying that cost of living is rising at these rates on average. For example, compared to prices of the representative consumption basket last year, prices are 4.0 per cent higher in October 2020 if you consider the CCPI basket. If you compare the NCPI basket, average prices are 6.4 per cent higher. However, what the Central Bank is aiming to do is to maintain these increases on average between 4-6 per cent on a year-on-year basis. From what we know from the Sri Lankan experience as well as experiences of other countries is that excessive inflation as well as deflation is not good for an economy, and this is why the Central Bank aims to maintain inflation between 4-6 per cent”.

“When you compare CCPI and NCPI, you will also notice that inflation is higher at the national level than in Colombo. This is because the food category in the consumption basket is relatively small in Colombo – people spend more on other goods – compared to the national average. You see that food prices have remained at high levels, and this is what people mostly feel as high inflation. In fact, if you consider food inflation in the CCPI basket, it was 6.3 per cent at end 2019, but was at 10 per cent in October 2020. Food inflation in terms of NCPI, which was 8.6 per cent at end 2019 has risen to 12.7 per cent by September 2020. Throughout 2020, food inflation has remained at double digit levels,” he said.

“The government is monitoring food inflation closely and has taken several measures to regulate prices of food supplies. In addition, the ongoing drive to promote domestic food production will also result in considerable gains in the period ahead, thereby allowing food inflation to subside”, Dr. Amarasekara said.

Meanwhile, a resident at Mount Lavinia told the IFR that retail grocery shops in the area face a supply disruption due to the prevailing situation in the country which has obviously led to increases in food prices.

A resident in Kottawa said,” Grocery shops here don’t have samba rice. They have enough stocks of Keeri Samba sold at Rs. 120 a kilo”.

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NSB introduces special credit scheme for shrimp farming industry

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National Savings Bank (NSB), in collaboration with one of its fully owned subsidiary, Sri Lanka Savings Bank(SLSB), has planned to introduce a special loan scheme to offer credit facilities under a lower interest rate with a view to accelerating the development of shrimp farming industry in Sri Lanka.

Shrimp farming industry in Sri Lanka, which came into being around 30 years ago, could be identified as a higher value generating sector among the industries based on aquaculture in the country.

With the objective of achieving a sustainable development in shrimp farming industry in the country, Sri Lanka Aquaculture Development Alliance has been established 15 years back and the permanent members of this organization will be able to obtain loan facilities within a value range of Rs. one Million to Rs. 100 Million under this loan scheme.

This Alliance comprises of 18 farmers’ societies, breeding center societies, seafood societies and shrimp feed societies in Puttlam District, in which the shrimp farming industry is mainly centralized. The Alliance operates the shrimp farming industry, in coordination with the National Aquaculture Development Authority of Sri Lanka, the main state sponsored organization mandated for the task of development of the aquaculture and inland fisheries sector in Sri Lanka and other government institutions. Further, the membership of this alliance represents the entire shrimp farming industry of the country.

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Lanka Realty Investments acquires controlling shares of On’ally Holdings

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CSE turnover almost Rs 3.5 billion

By Hiran H.Senewiratne 

Lanka Realty Investments Plc has acquired 50.8 percent  of the issued capital of Colombo Stock Exchange (CSE)  listed On’ally Holdings Plc for Rs 1.42 billion.

With the transaction Renula Capital and Lanka Reality Investments share prices appreciated significantly yesterday, stock market analysts said.

On’ally Holdings Plc announced that Lanka Realty Investments Plc has acquired 50.8 percent  ( 47,244,050 shares) of the issued capital (93,003,087 shares) of the company with the purchase of shares made on 3rd December 2020 at a price of Rs.30.20 per share. 

Meanwhile, in a separate filing Renuka Capital Plc announced that it has sold and disposed of 40,754,820 Ordinary Shares (43.821 percent ) held by the Company in On’ally Holdings Plc to Lanka Realty Investments Plc at a value of Rs.30.20 per share on the CSE. Renuka Capital PLC is the second largest shareholder of On’ally Holdings Plc.

The turnover stood at Rs 3.44 billion with two crossings mainly; On’ally Holdings crossing which contributed 42 percent to the turnover and Access Engineering. On’ ally 47.2 million shares crossed for Rs 1.43 billion and its share price was Rs 32.20 and Access Engineering one million shares crossed for Rs 25 million and its share price was Rs 25.

With the transaction  Renuka Capital share price appreciated by  more than 50 percent or Rs 2.50 . Its share price startered trading at Rs 5 and at the end of the day it moved upto Rs 7.50. Lanka Reality share Price share price moved up by 13 percent or  Rs 4.60. It’s share price startered trading at Rs 34.40 and at the end of the day it moved up to Rs 39.

In the retail market top five companies that mainly contributed to the turnover were JKH Rs 141.5 million (945,000 shares traded), Expolanka Rs 135.7 million (5.2 million shares traded), Melstacorp Rs 128 million (three million shares traded), Access Engineering Rs 123.3 million (4.9 million shares traded) and Renuka Capital Plc Rs 121.7 million  (18.5 million shares traded).

Amid those developments both indices moved upwards  i.e. All Share Price Index up by 17.26 points and S and P SL20 up by 8.81 points up. The share volume that transacted during the day was 22487.  According to stockbrokers that market sluggish and the latter part of the day  it picked up following the major crossing.

 

 

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SLT and Mobitel launch Green Premier League 2020

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SLT and Mobitel together began an exemplary green initiative project simultaneously with Sri Lankan Premier League (LPL) 2020 called “SLT – Mobitel Green Premier League” (GPL), as a sustainable environmental conservation project. According to the winning score of each team in every match of the LPL, SLT and Mobitel will take necessary actions to plant the equivalent number of plants as forest restoration at Rajawaka forest reserve in Kalthota, Balangoda. Thus, by the end of the LPL tournament, SLT and Mobitel will have taken the necessary actions to plant possibly around 4000 plants in the forest reserve and would have arranged a sustainable maintenance program with the Forest Department in accordance with UN sustainable developments goals. This would be a pioneer project within the context of any cricket premier league in the world!

From the 26th of November 2020 till the 16th of December 2020, SLT and Mobitel will be conducting this remarkable initiative aiming to increase the forest cover in Sri Lanka by planting these trees in 6 hectares in Rajawaka Forest reserve, which has identified as a rich biodiversity site and also the major water catchment area for the Samanalawewa reservoir. With an island-wide reach as the national telecommunications service provider, SLT hopes to inspire sports fans and the youth of the country to undertake their own steps towards environmental conservation and sustainability. SLT will continuously monitor this project in the next two years with the support of the Forest department to ensure the desired outcomes.

 

 

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