Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100) decelerated to 5.9% in February 2024 from 6.4% in January 2024. This deceleration in the headline inflation is broadly in line with the projections of the Central Bank of Sri Lanka (CBSL).
Food inflation (Y-o-Y) accelerated to 3.5% in February 2024 from 3.3% in January 2024, whereas Non-Food inflation (Y-o-Y) decelerated to 7.0% in February 2024 from 7.9% in January 2024. Monthly change of CCPI recorded -0.05% in February 2024 due to the combined effect of price decreases of 0.67% observed in the items of Food category and price increases of 0.62% observed in the items of Non-Food category. Meanwhile, core inflation (Y-o-Y), which reflects the underlying inflation trends in the economy, accelerated to 2.8% in February 2024 from 2.2% in January 2024.
Broadly speaking, inflation is expected to remain above the target in the near term mainly driven by the recent tax adjustments, before stabilising around the targeted level of 5 per cent over time, supported by well-anchored inflation expectations and appropriate policy measures.