Sri Lanka’s Colombo consumer price index (CPI) rose 1.2% year-on-year in August, following a 0.3% decline in July, the Department of Statistics reported on Friday.
This marks the first year-on-year increase in the index after 11 consecutive months of decline, the data showed.
The Colombo Consumer Price Index (LKCCPI=ECI), a key indicator for broader national price trends, tracks inflation in Colombo, the country’s largest city.
Food prices accelerated, rising 2% year-on-year in August compared with 1.5% in July. In the non-food category, consumer prices increased 0.8% in August, following a 1.2% year-on-year decline in July.
“Inflation is likely to remain under 2% for the rest of the year and is expected to reach the central bank’s 5% target only in the second half of 2026,” said Dimantha Mathew, head of research at First Capital.
Sri Lanka, which faced a severe financial crisis three years ago due to a record shortage of dollars, has rebounded strongly, posting 5% economic growth last year.
Inflation has slowed significantly over the past two years, allowing for a gradual reduction in interest rates. The central bank had earlier projected that inflation would turn positive this quarter, ending nearly a year of deflation.
The central bank kept policy rates unchanged last month after a surprise 25-basis-point cut in May to support economic growth.
