Sri Lanka’s headline inflation, measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100), dropped sharply to 0.5% in August 2024 from 2.4% in July 2024. This significant decline aligns with the Central Bank of Sri Lanka’s (CBSL) projections.
Food inflation (Y-o-Y) decreased to 0.8% in August from 1.5% in July, while non-food inflation (Y-o-Y) fell to 0.4% from 2.8% over the same period. On a month-to-month basis, the CCPI recorded a decline of 1.85%, driven by a 0.64% drop in food prices and a 1.21% decrease in non-food prices.
Additionally, core inflation, which reflects the underlying trends in the economy, eased to 3.6% in August 2024, down from 4.4% in July.
Looking ahead, headline inflation is expected to remain below the target of 5% in the coming months. Over the medium term, inflation is anticipated to gradually align with the target, supported by appropriate policy measures.