Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100), increased to 12.1 per cent in December 2021 from 9.9 per cent in November 2021. Meanwhile, on an annual average basis, the CCPI increased to 6.0 per cent in December 2021 from 5.3 per cent in November 2021. An in-depth analysis of the key drivers of current inflation suggests that a large component of inflation is driven by supply side factors. A detailed explanation in this regard will be published by the Central Bank shortly.

Inflation was driven by monthly increases of prices of items in both Food and Non-food categories. Subsequently, Food inflation (Y-o-Y) increased to 22.1 per cent in December 2021 from 17.5 per cent in November 2021, while Non-food inflation (Y-o-Y) increased to 7.5 per cent in December 2021 from 6.4 per cent in November 2021.

The Central Bank of Sri Lanka (CBSL), having considered the requests made by Sri Lankans working abroad, has decided to continue the payment of additional Rs. 8.00 per US dollar for worker remittances, paid in addition to the incentive of Rs. 2.00 per US dollar under “Incentive Scheme on Inward Workers’ Remittances”, for such workers’ remittances channelled through Licensed Banks and other formal channels and converted into Sri Lankan rupees, until 31.01.2022. The decision to continue this additional incentive of Rs. 10.00 per US dollar is in response to the favourable developments observed in workers’ remittances so far during December 2021.