Business
Central Bank says inflation is on target despite food price pressures
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”.
Notes upcoming elections are for the people of Sri Lanka to decide
Puts the questions on Bangladesh and Sri Lanka in one basket
By Sanath Nanayakkare
Sri Lanka needs to allow reforms to continue for a period of time, Julie Kozack, Director of the Communications Department, IMF said on September 12, 2024, according to the transcript of an IMF press briefing.Notably she made this comment while taking questions on Sri Lanka and crisis-hit Bangladesh in combination, during the press conference.
“Okay. Any questions on Sri Lanka or Bangladesh?” she asked, upon which, a questioner posed her the following question.
Question: “I would like to ask about Sri Lanka and whether there is any possibility of reopening the programme negotiations based on the possible results of the September 21 presidential election, and what the elections implications could be for that $3 billion program existing currently with Sri Lanka?”
Julie Kozack: Okay, I’ll start with Sri Lanka. So, just stepping back for a moment. On June 12th of 2024, our Executive Board completed the 2024 Article IV Consultation and the Second Review of the EFF program. That provided the country with access of about $336 million U.S. dollars. Programme performance remains strong. Reform efforts are bearing fruit. Economic growth is starting to revive. Inflation is coming down. Reserves, international reserves are increasing, and revenue mobilization is improving. Nonetheless, important vulnerabilities do remain, and sustaining reform momentum is going to be essential.”
“Regarding some of the specific questions about the presidential elections, first, it’s very important to note, of course, that for the upcoming elections, this is really for the people of Sri Lanka to decide, right. Achieving the programme’s objectives is a key priority to give Sri Lanka a chance to emerge from one of its worst crises in history. As I’ve already noted, a lot of progress has been made, but the country is not out of the woods yet, and it is important to safeguard those hard-won gains,” she said.
Taking the question on Bangladesh she said,” First, I do want to say that we are deeply saddened by the loss of lives and injuries during the recent protests. It was very distressing to hear about those losses of lives. From the IMF side, we are working closely with the interim government. An IMF team will visit Bangladesh in late September for a fact-finding mission and to discuss recent economic developments, and further details about the Staff visit will be communicated in due course.”
“We remain fully committed to working with Bangladesh in support of the people within the context of the IMF program, we will continue to work closely with the authorities to help advance the reform agenda. And, of course, as part of the upcoming mission, the team will be assessing all of the economic developments and any potential financing needs in Bangladesh.”
Says it will revolutionise the financial landscape of Sri Lanka
Intellect Design Arena Ltd, the World’s only Enterprise Grade Financial Technology Leader in Composable and Intelligent solutions for progressive Global Financial Institutions, announces the launch of eMACH.ai tailored specifically for the Sri Lankan financial landscape. With an impressive array of 329 microservices, 535 events and over 1757 APIs, this First Principles Thinking-based Platform enables financial institutions in the Island Nation to build future-ready solutions, providing them with a global competitive edge. The platform keeps a bank’s customer in focus, be it Retail, HNI, SME, or Corporate, and the events in their financial journey, besides taking care of events created by banking operations or generated by regulatory and compliance mandates.
Sri Lanka is at a pivotal point in its digital transformation journey. The launch of eMACH.ai in Sri Lanka comes at a time when fintech innovation is rapidly reshaping the financial services landscape globally. Key trends such as the rise of digital payments, AI-driven banking solutions, Open Banking frameworks, and cloud-based infrastructure are redefining how financial institutions operate across the world. Sri Lanka, too, is witnessing this shift, with a growing focus on digital transformation to improve financial inclusion, streamline operations, and create customer-centric experiences. By investing in cutting-edge technologies, enhancing digital infrastructure, and fostering a conducive regulatory framework, Sri Lankan banks can improve financial inclusion and operational efficiency and attract foreign investments.
eMACH.ai simplifies technology for Sri Lankan banks, empowering them to create solutions that are not just optimised but transformative. Its composable architecture aligns with the financial sector’s future needs, ensuring that banks can meet evolving customer expectations while remaining resilient in the face of rapid technological change. It enables them to develop strategies centered around customer needs, focusing on creating substantial business impacts rather than optimising technology.
Intellect already works with several prominent financial institutions in Sri Lanka, including HDFC Sri Lanka, Regional Development Bank (RDB), Cargills Bank, Commercial Development Bank (CDB), Central Finance, Seylan Bank, and Union Bank of Colombo. These institutions have been at the forefront of adopting digital transformation strategies to enhance their operational efficiency and customer experiences. With the introduction of eMACH.ai, Intellect is poised to strengthen its partnership with several other leading financial institutions in Sri Lanka, helping them deliver innovative financial services to a broader customer base.
With eMACH.ai, the banks and financial institutions in Sri Lanka can now have a global edge. The platform will,
Empower banks with 329 Microservices, 1757 APIs and 535 Events, enabling them to design future-ready technology solutions
Act as a Catalyst for Enterprise Connected Intelligence by signifying the shift with Intellect’s leadership guiding banks to stay ahead
Foster financial innovation and redefine the future of financial technology in the Sri Lankan market, giving the region its global edge
Discover new growth avenues by transforming enterprise with this composable and intelligent open finance platform, elevate experience with iTurmeric, a MACH composable platform and enhance operations with decision-grade intelligence platform, Purple Fabric
Ramanan SV, CEO-India & South Asia of Intellect Design Arena Ltd, expressed his excitement about launching eMACH.ai, stating, “With eMACH.ai, we are not just introducing a platform; we are unlocking the future of banking in Sri Lanka. We aim to empower financial institutions to lead with intelligence, agility, and innovation. Built on First Principles Thinking, eMACH.ai is engineered to transform the entire financial ecosystem—driving transparency, accelerating digital adoption, and fostering resilience. This platform is not only a game-changer for banks but also a catalyst for Sri Lanka’s journey towards becoming a financial powerhouse in the global arena.”
Robust framework adopted by the company to boost its export volumes
Pelwatte Dairy Industries Ltd. has strengthened its commitment to promoting a culture of safety and environmental sustainability. The company has dedicated itself to fostering a safe workplace while ensuring its operations align with both local and international standards for health, safety, and environmental protection.
As part of its overarching safety strategy, Pelwatte Dairy has adopted ISO 45001, the global standard for Occupational Health and Safety (OH&S). This certification establishes a framework to enhance employee safety, reduce workplace risks, and create better, safer working conditions. The main objectives under this standard include promoting a safety culture by encouraging leadership and employee participation, ensuring legal and regulatory compliance with local laws such as the Factory Ordinance and international standards like those from the International Labour Organization (ILO), and preventing workplace injuries through robust risk assessments aimed at achieving a zero-accident environment.
In addition, Pelwatte Dairy Industries highlighted its ongoing efforts to improve environmental performance through the adoption of the ISO 14001 framework. This internationally recognized standard provides a structured approach to managing and reducing environmental impact, enhancing sustainability across the company’s operations. In line with the ISO 14001 objectives, Pelwatte Dairy is committed to preventing harmful environmental impacts through diligent impact assessments. The company integrates sustainable practices across its operations by optimizing resource use, reducing waste, and improving energy efficiency.
The FSSC (Food Safety System Certification) is another critical framework adopted by Pelwatte Dairy, ensuring that all products meet global food safety standards. The company also promotes a culture of continuous improvement in food safety practices through regular assessments and audits, ensuring that their operations consistently meet international standards.
Akmal Wickramanayake, Managing Director of Pelwatte Dairy Industries Ltd., emphasized the need for leadership to take charge in setting safety standards and for employees at all levels to actively participate in creating a safer workplace. “At Pelwatte, we believe that safety is everyone’s responsibility. By encouraging leadership, fostering employee participation, and prioritizing continuous improvement, we aim to embed safety into the core of our operations,” stated Wickramanayake.
“Our goal is simple but critical—zero accidents and a hazard-free environment. Safeguarding the environment is a priority at Pelwatte Dairy, not just for compliance but as a key part of our sustainable growth strategy. As we expand into export markets, maintaining these high standards will ensure we remain competitive globally while upholding our commitment to safety and environmental responsibility. Pelwatte’s commitment to FSSC reinforces consumer and business partner confidence by maintaining the highest levels of food safety and regulatory compliance.”
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