Sri Lanka's inflation index up 8% year-on-year in August on higher food prices

Sri Lanka’s Colombo Consumer Price Index rose 8% year-on-year in August, after a 7.3% rise last month, the Statistics Department said on Monday.

The index, a leading indicator for broader national prices, tracks inflation in Sri Lanka’s capital.

Food inflation rose to 8.5% in August, from 6.3% year-on-year in July, as a severe drought linked to El Nino took hold in key food growing areas of the island nation and global wheat prices escalated, analysts said.

The non-food category was 7.7%, compared with 7.8% last month, the latest data showed.

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“We are likely to see inflation reach 8.5% in the next two months before tapering off, but that depends on the weather and global prices,” said Shehan Cooray, Head of Research at HNB Stockbrokers.

Sri Lanka’s inflation has been growing at a three-year high since last month, largely due to increasing energy costs from the Iran war.

The Central Bank of Sri Lanka has set an inflation target of 5% and expects inflation to gradually reduce in the medium term.