Sri Lanka`s inflation rate fell to a record low in March on the back of drastic declines in food and fuel prices after the island`s new government cut taxes on staple items, official figures showed Tuesday.
The Colombo Consumer Price Index, the main measure of inflation in Sri Lanka, showed a year-on-year increase in prices of just 0.1 percent, according to data from the census department.
In February, the rate of inflation was 0.6 percent. The previous low of 0.5 percent was recorded in January 2004.
"The main contributor for this decline was the moderation of food prices during the month," the Central Bank of Sri Lanka said in a statement.
The government of President Maithripala Sirisena, who came to power in January, reduced the prices of food and energy and lowered utility rates in line with an electoral pledge and ahead of parliamentary elections expected by mid-year.
Petrol and diesel prices are set by the government in Sri Lanka, and staple foods are heavily taxed.
Sirisena`s government cut prices on essential goods by reducing the official price of fuel, and by cutting taxes on more than a dozen food items, including lentils, rice and sugar.
The government expects inflation to remain low in Sri Lanka this year in line with a global trend.
The International Monetary Fund has forecast Sri Lanka`s economy will grow 6.5 percent this year, below the government`s target of 7.0 percent.
