Headline inflation as measured by the yearon-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100) increased to 6.3 per cent in June 2020 from 5.2 per cent in May 2020. This was mainly driven by the monthly increase in prices of items in the Food category. Accordingly, Food inflation (Y-o-Y) increased to 13.6 per cent in June 2020 from 11.1 per cent in May 2020, while Non-food inflation (Y-o-Y) remained unchanged at 0.8 per cent in June 2020. 

The change in the NCPI measured on an annual average basis increased to 5.6 per cent in June 2020 from 5.2 per cent in May 2020.

Benefitting from the normalizing of economic activities in the country following the complete relaxation of restrictions for mobility, the Manufacturing PMI increased significantly in June 2020 recording 67.3 with a month-on-month increase of 18.0 index points compared to May 2020.

The external sector showed signs of stabilisation, with the removal of most lockdown measures in the second week of May 2020. The impact of restrictions on non essential imports was observed in May with a notable reduction in merchandise imports. Meanwhile, merchandise exports, which dropped significantly in April, rebounded more than expected during the month. Workers’ remittances were significantly low in May 2020 compared to the same period in 2019, but recorded a notable increase compared to the extreme low levels recorded in April 2020. In relation to financial flows, the total exposure of foreign investment in the government securities market remained significantly low with a marginal outflow of government securities being recorded in May. With the resumption of trading in the Colombo Stock Exchange (CSE) in mid May 2020, there were some outflows of foreign investment.

The Monetary Board (MB) of the Central Bank of Sri Lanka (CBSL) at its meeting held on 10^th July 2020 has decided to suspend business of ETI Finance Ltd (ETIF) and Swarnamahal Financial Services PLC (SFSP), in terms of Section 31 of the Finance Business Act, No. 42 of 2011 (FBA) with effect from 13^th July 2020.

ETIF and SFSP have become insolvent due to various irregularities taken place, since 2011. Due to the inability of Board of Directors and Senior Management of the respective companies to satisfactorily address the said deficiencies, the MB on 02^nd January 2018 issued Directions restricting the affairs of the Companies and the powers of the Board of Directors of the two Companies. A Panel of Management was also appointed by the MB to oversee the affairs of both Companies.