Headline inflation as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100) increased marginally to 6.2 per cent in August 2020 from 6.1 per cent in July 2020. This was driven by the monthly increases in prices of items in both Food and Non-food categories. Meanwhile, Food inflation (Y-oY) increased to 13.2 per cent in August 2020 from 12.9 per cent in July 2020, whereas Non-food inflation (Y-o-Y) increased to 1.1 per cent in August 2020 from 1.0 per cent in July 2020.

Sri Lanka’s external sector recovered further in July 2020 supported by an increase in merchandise exports and increased workers’ remittances amidst reduced merchandise imports. Several notable achievements were observed in spite of the COVID-19 pandemic. Earnings from merchandise exports surpassed US dollars 1 billion in July for the first time since January 2020 and recorded a positive year-on-year growth for the first time since February 2020. As expected, merchandise imports remained subdued with the continuation of restrictions imposed on the importation of non essential goods. A substantial increase was observed in workers’ remittances in July 2020, recording the highest amount of monthly remittances since January 2018. Meanwhile, the level of gross official reserves of the country increased to US dollars 7.1 billion by end July 2020 with the receipt of the SAARCFINANCE swap facility from the Reserve Bank of India.