The Colombo Consumer Price Index1 (CCPI, 2021=100) based headline inflation (year-on-year, Y-o-Y) remained marginally above the target in May 2026, reflecting the impact of upward adjustments to domestic energy prices amidst the ongoing conflict in the Middle East. Accordingly, headline inflation (Y-o-Y) was recorded at 5.5% in May 2026 compared to 5.4% in April 2026.
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CCPI-based headline inflation accelerated marginally in May 2026
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External Sector Performance - April 2026
The impact of the war in the Middle East was reflected in the performance of the External Sector in April 2026 as well. The external current account recorded a deficit in April 2026 compared to the surplus recorded during January through March 2026. This was mainly driven by the widened trade deficit, a moderation in the services surplus, and higher primary income account deficit, despite an increase in workers’ remittances compared to a year earlier. Consequently, the external current account recorded a marginal deficit during January to April 2026.
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Sri Lanka PMI - Construction contracted in April 2026
The Sri Lanka Purchasing Managers’ Index for Construction (PMI – Construction), as reflected by the Total Activity Index, declined to 45.7 in April 2026, mainly due to the seasonal slowdown associated with the Sinhala and Tamil New Year period. Further, many survey respondents cited input shortages, particularly of petrochemical-based raw materials, and rising costs stemming from the conflict in the Middle East as challenges to the timely execution of planned work.
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IMF Executive Board Completes the Combined Fifth and Sixth Reviews Under the Extended Fund Facility for Sri Lanka
The IMF Executive Board completed the combined Fifth and Sixth Reviews of the Extended Fund Facility for Sri Lanka, providing the country with immediate access to SDR508 million (about US$695 million) to support economic policies and reforms.
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The Central Bank of Sri Lanka increases the Overnight Policy Rate (OPR)
The Monetary Policy Board, at its meeting held yesterday, decided to increase the Overnight Policy Rate (OPR) by 100 bps to 8.75%. The Board arrived at this decision after carefully considering the evolving conditions and outlook on the domestic and global fronts.
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The CBSL introduces a maximum Loan to Value (LTV) ratio for gold backed lending and tightens LTV ratios on credit granted for motor vehicles
The Governing Board of the CBSL decided to introduce a maximum LTV ratio for credit facilities secured by gold and tighten the maximum LTV ratios applicable to credit facilities granted in respect of motor vehicles with effect from 25 May 2026. These steps are taken by the CBSL in line with its macroprudential authority, in order to promote prudent lending practices, safeguard the resilience of financial institutions, and mitigate the potential build-up of systemic vulnerabilities.
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SL Purchasing Managers’ Index (PMI) – April 2026
Purchasing Managers’ Indices indicate a contraction in Manufacturing activities and Services activities in April 2026.
Following the seasonal pattern, Sri Lanka Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) contracted in April 2026, recording an index value of 42.6. New Orders, Production, Employment, and Stock of Purchases sub-indices declined during the month compared to the seasonal peak in March, resulting in an overall contraction in the index.
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Central Bank of Sri Lanka launches the Complaint Management System for Financial Consumers
The Central Bank of Sri Lanka (CBSL) announces the launch of an online Complaint Management System (CMS) marking a significant step to facilitate the submission of complaints and grievances by financial consumers relating to Financial Service Providers (FSPs) regulated by CBSL.
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CCPI based headline inflation accelerated in April 2026 amidst tensions in the Middle East
The Colombo Consumer Price Index (CCPI, 2021=100) based headline inflation (year-on-year, Y-o-Y) accelerated in April 2026 reflecting the spillovers from the ongoing war in the Middle East, particularly the significant upward adjustments in domestic energy prices. Accordingly, headline inflation (Y-o-Y) was recorded at 5.4% in April 2026 compared to 2.2% in March 2026.
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External Sector Performance - March 2026
The external current account recorded a marginal surplus in March 2026, mainly supported by higher workers’ remittances and a lower primary income deficit, despite a widening of the trade deficit and a moderation in the services surplus compared to a year earlier. The cumulative current account surplus reached US$ 531 million during the first quarter of 2026.