CCPI based headline inflation increases in November 2023

Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100)1 increased to 3.4% in November 2023 from 1.5% in October 2023. This increase in the headline inflation is mostly in line with the projections envisaged by the Central Bank of Sri Lanka (CBSL) in November 2023.

The Food deflation (Y-o-Y) continued for the fifth consecutive month recording 3.6% in November 2023 from 5.2% in October 2023. Meanwhile, the Non-Food inflation (Y-o-Y) increased to 6.8% in November 2023 from 4.9% in October 2023. Monthly change of CCPI recorded at 1.06% in November 2023 due to price increases observed in items of both Food and Non-Food categories, which were 0.12% and 0.95%, respectively. The core inflation (Y-o-Y), which reflects the underlying inflation in the economy, decreased to 0.8% in November 2023 from 1.2% in October 2023.

Inflation is expected to stabilise around the targeted level of 5 per cent over the medium term, supported by appropriate policy measures and well-anchored inflation expectations. Nevertheless, with the anticipated tax increases and their potential second-round impacts, together with possible upward adjustments to administratively determined prices, a transitory increase in inflation is probable in the short term.