Sri Lanka’s October Consumer Price Inflation Rises to 1%

In October, Sri Lanka witnessed a modest uptick in consumer price inflation, climbing to 1% from September’s 0.8%, as reported by the country’s statistics department on Tuesday.

Released monthly with a 21-day delay, the National Consumer Price Index (NCPI) serves as a comprehensive indicator of retail price inflation.

The Department of Census and Statistics revealed that food prices experienced a 5.2% decrease in October, following a similar decline in September. Conversely, non-food items saw a rise of 6.3% in October compared to a 5.9% increase in September.

Following a severe economic downturn triggered by a significant drop in foreign exchange reserves, Sri Lanka confronted unprecedented inflation last year. However, inflation rates have significantly decreased since June, partially due to statistical adjustments, a stronger local currency, and improved agricultural yields.

Dimantha Mathew, head of research at First Capital Research, anticipates inflation to hover around 5% by year-end despite recent electricity price hikes. Forecasts suggest that the impact of price adjustments is unlikely to heavily impact inflation, maintaining it within the central bank’s target range.

The Central Bank of Sri Lanka (CBSL), striving to maintain inflation between 4% and 6%, is set to announce its final policy rate decision for the year on Friday.

Last month, Sri Lanka reached a staff-level agreement on the first review of its $2.9-billion IMF bailout. However, formal approval from the IMF’s executive board has faced delays due to ongoing debt restructuring negotiations with bilateral creditors and bondholders.