Dec 31 Reuters Sri Lanka39;s consumer price index fell 1.7 yearonyear in December after dropping 2.1 in the previous month, the statistics department said on Tuesday.

The Colombo Consumer Price Index, a leading indicator for broader national prices, tracks inflation in Colombo, Sri Lanka39;s largest city.

Prices in the food category increased slightly to 0.8 in December from 0.6 the previous month. In the nonfood category, prices were 3 lower than a year earlier, compared to a decline of 3.3 in November.

Reductions in power tariffs and fuel prices as well as an appreciating rupee have helped to reduce inflation to the lowest point in nine years, analysts said.

Overall, the annual average inflation ended at 1.2 for the past 12 months, marking a notable recovery from the 17.4 faced a year prior, said Raynal Wickremeratne, cohead of research at Softlogic Stockbrokers.

We expect January to witness a minus 1.5 rate on inflation, with it returning to positive territory over the next three month period.

Sri Lanka suffered record inflation after its worst financial crisis in decades pummelled the economy, which has stabilised since it secured a 2.9billion bailout from the International Monetary Fund in March 2023.

Taking advantage of low inflation, Sri Lanka39;s central bank set a new single policy rate of 8 last month, easing monetary settings below previously used benchmarks and setting the stage for a sustained recovery from the crisis.

Sri Lanka39;s economy is…