Sri Lanka’s consumer price inflation dropped to minus 2 per cent year-on-year in December after easing to minus 1.7 per cent in November, official data showed on Tuesday, as the country posted a strong rebound from its worst financial crisis in decades. The National Consumer Price Index captures broad retail price inflation and is released with a lag of 21 days every month.
Prices in the food category moved to minus 1.0 per cent after posting 0.0 per cent in November. In the non-food category, prices changed to minus 2.9 per cent on the month from minus 3.1 per cent in November.
Inflation is likely to remain low in the next six months after Sri Lanka reduced its household power tariffs by 20 per cent earlier this month.
Under the latest revision, industries will get a reduction of 30 per cent while businesses in the tourism sector, a key foreign exchange earner for the island nation, will see their power prices slump by 31 per cent.
“We are likely to see inflation reach positive territory of about 2 per cent-3 per cent by mid-year,” said Shehan Cooray, head of research at Acuity Stockbrokers.
Sri Lanka’s central bank also expects inflation to reach their target of 5 per cent by mid-2025.
Sri Lanka suffered record inflation after its worst financial crisis in decades triggered by a record fall in dollar reserves pummeled the economy in 2022.
Helped by a $2.9 billion International Monetary Fund (IMF) program the island nation has posted a rebound and is estimated to have grown by 5 per cent last year, latest central bank data showed.
