Sri Lankan consumer prices rose 1.5% in August compared with the same month last year, jumping from an annual growth rate of 0.7% in July, the statistics department said on Monday.
Sri Lanka has recovered strongly since plunging into a financial crisis due to a record shortage of dollars three years ago, posting economic growth of 5% last year.
The island nation’s inflation has also slowed significantly over the last two years, allowing official interest rates to gradually come down.
The National Consumer Price Index captures broad retail price inflation and is released with a lag of about three weeks every month.
The annual inflation rate in the food category rose to 2.9% in August from 2.2% in July. In the non-food category, consumer prices were up an annual 0.4% last month, compared with a drop of 0.6% year-on-year in July.
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The central bank is expected to keep interest rates unchanged on Wednesday, according to a Reuters poll, as it awaits clarity on the next budget and monitors economic growth.
“Now that inflation has stabilised, we don’t think it will change much but there may be a bit of a jump in August because of the low base from last year,” said Dimantha Mathew, head of research at First Capital.
The annual inflation rate is expected to end the year at around 2%, analysts said, with the central bank’s target of 5% likely to be reached in mid-2026.
President Anura Kumara Dissanayake, who also serves as finance minister, will present the 2026 budget on November 7, and he is expected to outline plans for record capital expenditure.
The deputy finance minister told Reuters last week that the government is aiming to boost economic growth to up to 6% in 2026, and that it sees growth at 4%-4.5% this year.
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