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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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SLIIT Business School hosts first International Conference on Sustainable and Digital Business 2022

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SLIIT Business School conducted the first-ever International Conference on Sustainable and Digital Business 2022 (ICSDB) on 1st and 2nd December. The Conference presented ICSDB Excellence Awards to selected winners, recognizing distinct sustainable and digital business initiatives.

Keynote speakers at the event included Professor John Bessant, Emeritus Professor of Exeter University, Professor Jaideep Prabhu of the Judge Business School of the University of Cambridge and Professor Muthu De Silva of Birkbeck, University of London. The main address on the second day of the conference was delivered by Dr. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka.

The ICSDB Excellence Awards 2022, recognized Sri Lankan enterprises who had initiated digital business initiatives, and were established as beneficial to various stakeholders under the ICSDB Index criteria of Ingenuity, Continuity, Scope, Deployment and Benefits. The ICSD Excellence Awards presented accolades under Gold, Silver and Bronze categories. An eminent group of judges including practicing managers from industries, representatives of industry bodies, and academics comprised the panel to select the winners.

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USAID launch Island Plastic Challenge to help consumer goods companies address plastic waste

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Island Climate Initiative

In support of the Ministry of Environment’s policy on plastic waste reduction, the United States Agency for International Development’s (USAID) partner, Island Climate Initiative (ICI) under USAID’s global Clean Cities Blue Ocean Program, is calling on innovators around the world to design solutions to help Sri Lanka’s leading consumer goods companies reduce their plastic footprint.

Successful applicants whose solutions best address consumer goods companies’ top single-use plastic challenges will get the opportunity to pitch their technology to leading companies at a solution showcase that will be held in early 2023. Winners’ solutions may be implemented contributing to global efforts to reduce the more than eleven million tons of plastic that enter the ocean each year. The online challenge platform is now publicly open for applications at www.islandplasticchallenge.com. Innovators and start-ups, both local and overseas, are all invited to apply.

“USAID strongly believes that successful development initiatives are achieved through partnerships and collaboration. We look forward to working with Island Climate Initiative as they identify and facilitate the piloting of viable and scalable solutions to change the way we produce, consume, and manage plastic packaging waste to stem the tide of ocean plastic pollution.,” said USAID Sri Lanka and Maldives Economic Growth Advisor Mark Peters.

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Cinnamon Hotels inks MoU with Skills for inclusive growth

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Cinnamon Hotel Management Ltd. (CHML) has entered into a Memorandum of Understanding (MoU) with the Australian Government-funded Skills for Inclusive Growth Program (S4IG), managed by Palladium International Group, to achieve several strategic results through cooperation recently signed at the Cinnamon Grand Hotel in Colombo. S4IG is a program of the Department of Foreign Affairs and Trade (DFAT) in accordance with the terms of a subsidiary agreement signed on March 31, 2022, between DFAT and the Sri Lankan State Ministry of Skills Development, Vocational Training, Research, and Innovation.

The MoU sets out the terms on which S4IG will plan and implement specified activities to support the reality TV show Supreme Chef Season 03. It is an exciting collaboration between the Australian Government’s aid program and the Sri Lankan Ministry of Skills Development and Vocational Training. The intervention’s goal is to promote the hospitality industry, specifically cooking, as a viable career option for Sri Lankans. Following the success of seasons 1 and 2, this season is being delivered on a national scale. Through food experiences and culinary art challenges, the season brings together government agencies and private training institutes to support industry and highlight tourism in the country and specifically to address chronic skills shortage in kitchen.

By signing the MoU, CHML acts as the hospitality partner in providing a location for filming related to the show and assisting with the wider goals of the show, mainly to promote the local destinations and regional food specialties as well as provide internship and employment opportunities to the public. CHML will provide six-month internship opportunities for on-the-job training for the top 20 contestants of Supreme Chef Season 3, with the possibility of long-term employment at the end of the internship, and also one year of guaranteed employment for the top three female contestants of Supreme Chef Season 3. The future of the hospitality industry and, indeed, the economy depends on the quality of its human capital, and this partnership aims to elevate the skills and knowledge of the youth. Cinnamon Hotels & Resorts, as a hospitality trendsetter, intends to remain at the forefront of improving and upskilling the industry where possible, and this partnership with S4IG is one such shining example.

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