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 1.5% in October 2023 from 1.3% in September 2023. This slight increase in the headline inflation is mostly in line with the projections envisaged by the Central Bank of Sri Lanka (CBSL) in October 2023.
The Food deflation (Y-o-Y) continued for the fourth consecutive month and remained unchanged at 5.2% in October 2023 compared to the previous month. Meanwhile, the Non-Food inflation (Y-o-Y) increased to 4.9% in October 2023 from 4.7% in September 2023. Monthly change of CCPI recorded at -0.22% in October 2023 due to the combined effect of price decreases of -0.63% observed in the items of Food category and price increases of 0.41% recorded in the items of Non-Food category. The core inflation (Y-o-Y), which reflects the underlying inflation in the economy, decreased to 1.2% in October 2023 from 1.9% in September 2023.
Inflation is expected to stabilise around the targeted level of 5% over the medium term, supported by appropriate policy measures and well-anchored inflation expectations. Nevertheless, should there be any upward increases to administratively determined prices, tariffs or taxes by the Government, a transitory increase in inflation beyond the target is probable in the short term.