FINANCIAL CHRONICLE – The inflation rate in Sri Lanka, as indicated by the Colombo Consumer Price Index (CCPI), increased to 7.3% in July 2026, up from 6.8% in June 2026, surpassing the Central Bank’s target ceiling of 7%. This rise is attributed to adjustments in housing rents within the non-food sector and the impact of base effects on food inflation, according to the Central Bank of Sri Lanka (CBSL).
The economy of Sri Lanka has experienced upward price movements following a government decision to increase fuel prices by approximately 47% due to supply shortages linked to escalating tensions in the Middle East and rising global oil costs.
In June, the widely monitored Colombo Consumer Price Index increased by 0.5 points, reaching 208.2 points compared to 207.7 points the month prior.
Year-on-year food inflation surged to 6.3% in July 2026, rising from 3.6% in June 2026, which significantly contributed to the overall inflation rate. Meanwhile, non-food inflation on a year-on-year basis decreased to 7.8% in July 2026 from 8.4% in the previous month. Core inflation also saw an increase, climbing to 4.4% in July 2026 from 4.0% in June 2026.
Last month, the Central Bank maintained its Overnight Policy Rate. The CBSL indicated that inflation projections from the monetary policy meeting in July 2026 suggest that headline inflation is likely to remain above the 5% target in the short term, before gradually easing and stabilizing around the target in the medium term, contingent on the implementation of appropriate policy measures.
However, the CBSL cautioned that the current inflation forecast is subject to significant uncertainty due to the volatile situation in the Middle East and its potential repercussions on both global and domestic economic conditions. (Colombo/Aug3/2026)
