Sri Lanka’s headline inflation, measured by the Colombo Consumer Price Index (CCPI), rose to 8.3 percent in October from 8.0 percent in September, according to the latest figures.
The year-on-year rate is calculated against the same month a year earlier, with 2021 as the base year (2021=100). Food inflation edged up to 8.8 percent in October from 8.7 percent in September, while non-food inflation rose to 8.0 percent from 7.7 percent over the same period.
Core inflation, which leaves out the more volatile items, accelerated to 5.6 percent from 5.4 percent in September.
On a month-on-month basis, the CCPI increased by 0.35 percent in October. The rise came mainly from the non-food category, which contributed 0.33 percentage points, largely because of higher prices in the Restaurants and Hotels category. The food category added a marginal 0.02 percentage points.
The figures also carry the projections made during the September 2026 monetary policy round. Under those projections, headline inflation is expected to stay in the high single digits through the first quarter of 2027 before easing towards the 5 percent target. The projections depend, among other assumptions, on the tensions in the Middle East and their spillover effects gradually dissipating.
Background
The CCPI is the headline measure of consumer price changes in the Colombo area. It tracks the cost of a fixed basket of goods and services, and the year-on-year figure shows how much that basket costs compared with the same month a year earlier. Core inflation removes the most volatile components, so it is often read as an indicator of underlying price pressure.
The Central Bank of Sri Lanka (CBSL) targets inflation of 5 percent over the medium term and reviews its policy interest rates at regular monetary policy meetings. Its projections are published with each review and are conditional on assumptions about the economy and global events, as the latest figures note.
President Anura Kumara Dissanayake also acknowledged that rising prices have put pressure on households, and attributed much of that pressure to the conflict in the Middle East and disruptions to international supply routes.
What it means
An inflation rate of 8.3 percent means that, on average, the basket of goods and services measured by the index costs 8.3 percent more than it did a year ago. Households may feel the increase most in meals and accommodation away from home, which drove the monthly rise in October.
The projections suggest price growth is expected to stay elevated into early 2027 before easing. Borrowers and savers follow these figures closely, since the Central Bank takes inflation into account when it sets interest rates.
