Sri Lanka’s consumer price index fell 4.2% year-on-year in February after dropping 4% in January, the statistics department said on Friday.
The Colombo Consumer Price Index, a leading indicator for broader national prices, tracks inflation in Colombo, Sri Lanka’s biggest city.
Prices in the food category were down 0.2% year-on-year in February after rising 2.6% in January. In the non-food category, prices fell an annual 6.1% in February after a 4.7% decline in January.
Inflation is likely to remain low in the next six months after Sri Lanka reduced its household power tariffs by 20% last month.
“Supported by lower demand-side pressure and low base effect, Sri Lanka is likely to see inflation reach positive territory around August,” said Shehan Cooray, head of research at Acuity Stockbrokers.
Sri Lanka records highest deflation in 65 years
Sri Lanka’s central bank also expects inflation to reach its target of 5% by mid-2025.
Sri Lanka suffered record inflation after its worst financial crisis in decades triggered by a record fall in dollar reserves pummelled the economy in 2022.
But Sri Lanka is aiming to grow at 5% this year and is expecting the International Monetary Fund (IMF) to approve the fourth tranche of its $2.9 billion program on Friday to support the island’s recovery.
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