Deflation Eases in July as Sri Lanka Edges Toward Inflation Target

COLOMBO (News 1st); Sri Lanka’s deflationary trend continued to ease for the fifth consecutive month in July 2025, with the Colombo Consumer Price Index (CCPI) recording a year-on-year headline deflation of 0.3%, compared to 0.6% in June, according to the Central Bank of Sri Lanka.

Food inflation moderated significantly to 1.5% in July from 4.3% in June, while Non-Food deflation eased to 1.2%, down from 2.8% the previous month.

On a month-on-month basis, the CCPI declined by 0.23%, with the Food category contributing -0.86 percentage points, and the Non-Food category contributing +0.63 percentage points.

Meanwhile, core inflation, which reflects underlying price trends excluding volatile items, inched up to 1.6% in July from 1.5% in June.

The Central Bank noted that the temporary deflationary phase experienced since September 2024 is nearing its end. Inflation is expected to gradually accelerate toward the 5% target, supported by appropriate policy measures.