The sharp deceleration has resulted from the moderation in prices of some non food category items that prevailed in the month of May such as housing, water, electricity, gas and other fuels. However, clothing and footwear prices have increased by 0.1 percent.

However, all the other sub categories including Furnishing, Household Equipment and Routine Household Maintenance; Transport; Communication; Recreation and Culture; Education; Health; and Miscellaneous Goods and Services remained unchanged during the period.

Prices of items in the food and non alcoholic beverages category has increased by 1.3 percent while almost all the varieties of vegetables, fresh fish, potatoes, red onion, big onion, fruits and eggs have decreased significantly during the month.

Core inflation declined both on YoY and annual average basis in May 2014. Accordingly, annual average core inflation, which decelerated steadily from June 2013, reached 3.1 per cent in May 2014, the lowest recorded level since its inception. YoY core inflation also declined marginally to 3.3 per cent in May from 3.4 per cent in April 2014.

This favourable movement reflects the impact of demand management policy that effectively checked the growth in aggregate demand. (KH/SI)