The Colombo Consumer Price Index fell 0.5 percent or 0.8 points during the month to 170 points during the month helped by a 1.4 percent fall in the food component of the index. Non-foods rose 0.4 percent.
Sri Lanka's central bank has expected the inflation to ease off from March, as the base effect of currency depreciation in early 2012 wore off.
Sri Lanka's consumer price index is now unchanged from the January level of 170 points.
Past experience has shown that that it is normal in Sri Lanka for inflation to ease . The index can even fall in absolute terms with prudent Central Bank policies which allow exchange rate appreciation. (Sri Lanka inflation spike could be one-off: IMF)
In recent weeks the Central Bank has prevented the exchange rate from appreciating beyond 125 to the US dollar.
The monetary authority has been selling down its Treasury bill stock in absolute terms which were acquired to print money, push credit to unsustainable levels, worsen loan to deposit ratios of banks and trigger a balance of payments crisis from mid 2011, analysts say.
Sell downs of central bank held Treasuries squeezes out the volume of dollars flowing out of the country, compared to the inflows during the period by killing bank credit by that volume.
External conditions have also been muted with commodity prices and gold prices collapsing indicating that demand pressure from reserve currency central banks are also benign.
http://www.lankabusinessonline.com/news/Sri_Lankas_inflation_eases_to_6.4-pct_in_April/2015136892