Headline inflation as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100) increased to 6.2 per cent in December 2019 from 4.1 per cent in November 2019. This was driven by monthly increase of prices of items in the Food category along with the statistical effect of the low base prevailed in December 2018. Food inflation (Y-o-Y) increased substantially to 8.6 per cent in December 2019 from 4.0 per cent in November 2019, while Non-food inflation (Y-o-Y) remained unchanged at 4.2 per cent. 

The trade deficit contracted marginally in November 2019 (year-on-year), with both imports and exports declining. During the first eleven months of 2019, the trade deficit contracted compared to the corresponding period in 2018, as a result of the significant decline in expenditure on imports along with a marginal increase in earnings from exports. Although tourist arrivals decreased on a year-on-year basis in November 2019, a continued recovery is seen in the tourism industry. Workers’ remittances declined (year-on-year) in November 2019 and have recorded a cumulative decline during the first eleven months of 2019. Meanwhile, the financial account of the balance of payments was augmented with the proceeds of the seventh tranche of the International Monetary Fund’s Extended Fund Facility (IMF EFF) programme and net foreign inflows to the Government securities market. However, the CSE recorded a net outflow during the month. The Sri Lankan rupee appreciated against the US dollar during 2019 and thus far during 2020 as well.