Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100) decreased to 12.0% in June 2023 from 25.2% in May 2023. The decline in the headline inflation is broadly in line with the disinflation path envisaged by the Central Bank of Sri Lanka (CBSL) in April 2023.

After two years, the Food inflation (Y-o-Y) decreased to a single digit level of 4.1% in June 2023 from 21.5% in May 2023, while the Non-Food inflation (Y-o-Y) decreased further to 16.2% in June 2023 from 27.0% in May 2023. Monthly change of CCPI recorded at 0.02% in June 2023 and this marginal change was due to the netting off of price increases observed in the items of Food category, which was 0.41% by the price decreases observed in the Non-Food category, which was -0.39%. The core inflation (Y-o-Y), which reflects the underlying inflation in the economy, decreased to 9.8% in June 2023 from 20.3% in May 2023.

In May 2023, Purchasing Managers Indices indicated an expansion in Services activities and a contraction in Manufacturing activities.

Manufacturing PMI declined in May 2023, yet at a slower rate, indicating a month-on-month contraction in manufacturing activities. Accordingly, Manufacturing PMI recorded an index value of 46.2 in May, driven by decreases recorded in all the sub-indices.

Services sector PMI returned to the growth territory recording an index value of 53.5 in May 2023 following the marginal drop observed in the previous month. This was led by the increases observed in New Businesses, Business Activities and Expectations for Activity. Nevertheless, Employment and Backlogs of Works continued to decrease during the month.