Central Bank data shows easing deflationary pressures as consumer prices start to stabilize.
Sri Lanka’s inflation rate climbed to -1.9% in March, up from -3.9% in February, according to new data released by the Central Bank of Sri Lanka. The latest figures suggest that the country’s prolonged period of deflation may be gradually coming to an end, as consumer prices show signs of steadying after months of decline.
The deflation experienced during much of the post-crisis recovery was largely driven by a combination of subdued domestic demand, falling global commodity prices, and strict monetary policy aimed at stabilizing the national currency. However, the March data indicates that these downward pressures are starting to ease.
Food prices, a major component of the National Consumer Price Index (NCPI), returned to positive territory, with food inflation rising to 0.8% in March from -1.1% the previous month. Non-food inflation also showed signs of recovery, narrowing from -6.0% in February to -4.1% in March. Food items alone contributed 0.35 percentage points to the overall inflation figure, highlighting a rebound in household spending on essentials.
The NCPI for all items was recorded at 206.0 in March, reflecting a slight decrease of 0.2 index points from February. While the index continues to trend downward, the slower rate of decline supports the view that Sri Lanka is transitioning out of a deflationary environment.
For businesses, the emerging shift toward mild inflation could impact pricing strategies, cost management, and investment planning—especially in sectors that are highly sensitive to consumer demand and input costs.
With inflation patterns evolving, policymakers and industry leaders will be closely watching upcoming data to assess the strength and sustainability of this economic normalization.