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.
Non-Food inflation (Y-o-Y) accelerated to 7.8% in May 2026 from 6.8% in April 2026, contributing to the increase in headline inflation. Meanwhile, Food inflation (Y-o-Y) decelerated to 0.9% in May 2026 from 2.8% in April 2026.
On a month-on-month basis, the CCPI recorded an increase of 0.9% in May 2026. This increase was driven by the Non-Food category, which contributed 0.6 percentage points, largely owing to the increase in prices of the Housing, Water, Electricity, Gas, and Other Fuels (L.P. Gas) and Transport (Petrol) sub-categories, while the Food category contributed 0.3 percentage points.
Meanwhile, core inflation (Y-o-Y) accelerated marginally to 3.9% in May 2026 from 3.8% in April 2026.
Amid the fluid nature of the tensions in the Middle East and the wide-ranging spillovers across both global and domestic economic activity, the domestic inflation outlook remains subject to elevated uncertainty. Inflation projections made at the monetary policy round in May 2026, based on currently available information and assumptions, indicate that headline inflation is likely to remain above the target of 5% in the period ahead, before easing and stabilising around the target over the medium term, supported by appropriate policy measures.
