Inflation (CCPI, year-on-year)

Inflation was 8.0% in Sep 2026, 6.5% compared with a year earlier. Current status: Watch. Healthy range: The Central Bank of Sri Lanka targets mid-single-digit inflation (around 4–6%). 2–6% is Good, 6–10% Watch, and above 10% (or below 0%) Concern. Moderate, stable inflation supports growth.

Inflation measures how fast the general level of prices is rising. The CCPI (Colombo Consumer Price Index) tracks the price of a basket of everyday goods and services; the year-on-year figure compares this month with the same month a year ago. Formula: inflation = (index now − index a year ago) ÷ index a year ago × 100.

If a basket of goods cost Rs 1,000 last year and Rs 1,050 now, inflation is 5% — the same shopping costs Rs 50 more.

When inflation is high each rupee buys less. Real wages fall unless pay keeps up, so purchasing power erodes — hitting poorer households hardest because food is a big share of their spending. The Central Bank usually raises the policy rate (a Taylor-rule style reaction), making borrowing dearer and slowing demand (the Phillips-curve trade-off).

Very low inflation can be healthy, but deflation (falling prices) is dangerous: people delay purchases expecting lower prices later, demand weakens, and the real burden of debt rises because incomes fall while debts stay fixed (a debt-deflation spiral).

The Central Bank of Sri Lanka targets mid-single-digit inflation (around 4–6%). 2–6% is Good, 6–10% Watch, and above 10% (or below 0%) Concern. Moderate, stable inflation supports growth.

CBSL target band 4–6%; wider 2–6% treated as healthy.

Inflation decides what your money can actually buy. It drives interest rates, wage demands and the exchange rate, and is the number most felt in daily life.

How we calculate this

Year-on-year percentage change of the Colombo Consumer Price Index (Department of Census & Statistics). Published monthly.

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