Consumer prices rise 2.7% on-year in October

Sri Lanka’s consumer prices rose 2.7% year-on-year in October, accelerating from a 2.1% increase in September, the statistics department said, though the rate remained below the central bank’s target level.

Sri Lanka has recovered strongly since plunging into a financial crisis three years ago amid a record dollar shortage.

The South Asian island nation posted economic growth of 5% in 2024, and inflation has also slowed significantly over the last two years, allowing official interest rates to come down gradually.

The National Consumer Price Index captures broad retail price inflation and is released with a lag of about three weeks each month.

The annual inflation rate in the food category was 4.1% in October, up from 3.8% in September. In the non-food category, consumer prices rose 1.5% last month, compared with 0.7% year-on-year in September.

“We do not see any significant changes to inflation. The expectation is for inflation to remain at 2% to 3% or within the central bank’s target of 5% until the last quarter of 2026,” said Dimantha Mathew, head of research at First Capital.

The annual inflation rate is expected to end the year around 2%, analysts say, with the central bank’s target of 5% likely to be reached in mid-2026.