Sri Lanka’s consumer prices rise 2.9% on-year in December

Sri Lanka’s consumer prices were up 2.9% year-on-year in December, after rising 2.4% in November, the statistics department said on Wednesday.

The National Consumer Price Index captures broad retail price inflation and is released with a lag of about three weeks each month.

The annual inflation rate in the food category rose to 4.4% last month, from 3.6% in November. In the non-food category, consumer prices were up 1.6% in December, from 1.5% in November.

The island nation, which has been emerging from the worst economic crisis in decades that peaked in 2022, is struggling from the impact of a severe cyclone that hit in late November.

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Cyclone Ditwah killed 646 people and, at its peak, affected nearly 10% of the 22 million population. Torrential rain and floods caused $4.1 billion in damage to crops and infrastructure, according to World Bank estimates.

But the impact on food inflation was expected to be transitory, said Shehan Cooray, head of research at HNB Stockbrokers.

“We expect inflation to reach about 4% by the middle to 2026,” he added.

The Central Bank of Sri Lanka has kept its inflation target at 5% and will be announcing its first policy decision for 2026 next Thursday.