Sri Lanka inflation rises to 2.7% in April from 2.5% in March

By Thomson Reuters May 21, 2024 | 5:12 AM

COLOMBO (Reuters) – Sri Lanka’s consumer price inflation rose to 2.7% in April from 2.5% in March, official data showed on Tuesday.

The National Consumer Price Index (NCPI) captures broad retail price inflation and is released with a lag of 21 days every month.

Food prices rose 3.3% in April from 5% in March, the Department of Census and Statistics said.

Prices for non-food items rose 2.3% in April from 0.7% in March, as the impact of a 22% reduction in power tariffs for households implemented in March wore off.

Overall inflation is unlikely to change significantly in the next three months, analysts said, due to expectations that global oil prices and local demand-side pressures will remain subdued.

Inflation will remain within the Central Bank of Sri Lanka’s (CBSL) target of 5%.

“Inflation might increase slightly because of higher food prices in the months ahead. So we might see inflation hitting 4%-4.5% but nothing to worry too much about,” said Dimantha Mathew, head of research at First Capital.

Sri Lanka racked up record high inflation that peaked at 70% in September 2022 after its economy was crushed by the worst financial crisis in decades, triggered by a severe plunge in foreign exchange reserves.

Helped by a $2.9 billion program from the International Monetary Fund, Sri Lanka’s economy has slowly stabilised and is expected to grow by 3% in 2024 after two years.

Slowing inflation has prompted the Central Bank of Sri Lanka to cut policy rates by 700 bps since last year to help the economy return to growth.

(Reporting by Uditha Jayasinghe; Editing by Andrew Heavens and Bernadette Baum)