* What: August consumer price index
* When: Tuesday, Sept. 30, about 3:00 pm (0930 GMT)
* 12-mth annual average seen at 23.0 pct vs August's 22.6 pct By Shihar Aneez
COLOMBO, Sept 29 (Reuters) - Sri Lanka's inflation <LK/INFL1>, as measured on a 12-month moving average, is expected to have risen in September to its highest level in six years due to high oil and food prices in the first half of 2008.
The median forecast of nine analysts predicted the 12-month moving average had risen to 23.0 percent in September, the highest-ever reading for the index and above August's 6-year high of 22.6 percent.
However, consumer prices for this month are forecast to have risen 23.0 percent from last year, easing from a 24.9 percent rise in August.
"Consumer prices are easing due to fall in commodity prices and tightening of monetary policy by the central bank," Vajira Premawardhena, head of research at Lanka Orix Securities, said.
"So the consumer prices would fall continuously and annual average inflation will take another two months to drop as it still has the impact of past price increases."
Central Bank Governor Ajith Nivard Cabraal last month told Reuters that annual inflation is slowing down owing to the bank's switch to reserve money targeting from policy rate changes as its main inflation fighting tool.
However, Cabraal said the bank would not reach its year-end target of 10-11 percent because of the effect of dual food and fuel price shocks on the nation's $27 billion economy. It would not be over 20 percent, he said.
The monetary policy would also cut down GDP growth in the short term, to below the 7 percent forecast for this year, Cabraal said.
In July, the central bank reduced its annual average reserve money target to 11.75 percent after cutting it to 12.5 percent in April to curb money supply. Originally, the bank targeted 14.7 percent.
The overnight repurchase rate stands at 10.5 percent and the reverse repurchase rate at 12 percent.
Both rates are at their highest levels since 2002, but well below T-bill rates, which commercial banks use as a reference for their own lending rates instead of the official rates.
Economists say the bank's reserve money targeting still has not brought down core inflation.
"The monetary policy has not been effective enough to curtail the increasing expenditure and the consequent rise in aggregate demand, caused by huge, unsustainable budget deficits," Prof. A.D.V. de S Indraratna, president of the Sri Lanka Economist Association said at a conference earlier this month.
Annual core inflation, which excludes oil and food in its calculations, has surged to 17.4 percent from 6.7 percent in November 2007.
The Census and Statistics Department introduced a new inflation index formally from December, with 2002 as the base year, saying the old measure did not reflect the consumption pattern of households.
CCPI (N) (New Index, pct) 12-Mo Average vs year ago ----------------------------------------------------------- Median 23.00 23.00 Average 23.06 23.03 Low 21.80 22.95 High 24.00 23.20 Number of banks 9 9 Note: The following banks participated in the poll: Commercial Bank of Ceylon, HSBC, Standard Chartered Bank, Citibank, National Development Bank (NDB) Nations Trust Bank (NTB), Hatton National Bank (HNB), Bank of Ceylon, and People's Bank. (Editing by Bryson Hull)
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