Colombo’s consumer price index rises on-year in August, first time in twelve months

Sri Lanka’s Colombo consumer price index rose 1.2% year-on-year in August, after falling 0.3% in July, the statistics department said on Friday.

On a year-on-year basis, the index turned positive in August after falling for 11 straight months, the data showed.

The Colombo Consumer Price Index (LKCCPI=ECI), a leading indicator for broader national prices, tracks inflation in Colombo, Sri Lanka’s biggest city.

Inflation in the food category accelerated to 2% year-on-year in August from 1.5% in July. In the non-food category, consumer prices increased 0.8% this month compared with a drop of 1.2% year-on-year in July.

“Inflation will probably remain under 2% for the rest of the year and reach the central bank’s target of 5% only in the second half of 2026,” said Dimantha Mathew, head of research at First Capital.

Sri Lanka, which was plunged into a financial crisis due to a record shortage of dollars three years ago, has recovered strongly, posting 5% economic growth last year.

The island nation’s inflation had slowed significantly over the last two years, supporting a gradual lowering of interest rates.

Sri Lanka’s central bank had said earlier it expects inflation to turn positive this quarter, ending almost a year of deflation.

It kept policy rates unchanged last month after trimming its benchmark interest rate by 25 basis points in May in a surprise move to support growth.

Source: Reuters

--Agencies