Sri Lanka’s Inflation Rate Reaches -1.7% Post Economic Rebound

Official data showed on Monday that Sri Lanka's consumer price inflation dropped to minus 1.7 percent year-on-year in November after easing to minus 0.7 percent in October. 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 slipped to 0.0 percent in November from 1.3 percent in October. In the non-food category, prices changed to minus 3.1 percent on the month from minus 2.3 percent in October.

Analysts said reductions in power tariffs and fuel prices, as well as an appreciating rupee, have helped to reduce inflation to its lowest point in nine years.

"We are likely to see inflation remain at these levels for the first two months of 2025," said Shehan Cooray, head of research at Acuity Stockbrokers.

"But if there is foreign exchange pressure from a resumption of vehicle imports then we may see inflation increase gradually but unlikely it will be above 4 per cent."

Sri Lanka suffered record inflation after its worst financial crisis in decades, triggered by a record fall in dollar reserves that pummelled the economy in 2022.