Colombo, Sri Lanka – 31 August 2026 – Sri Lanka’s headline inflation, as measured by the Colombo Consumer Price Index (CCPI, 2021=100), saw a significant acceleration in August 2026, reaching 8.0% on a year-on-year (Y-o-Y) basis. This marks an increase from the 7.3% recorded in July 2026, according to the latest data released today by the Central Bank of Sri Lanka (CBSL).
The upward movement in headline inflation was primarily attributed to a statistical base effect in food inflation, which saw a notable increase during the month. The CBSL’s Communications Department highlighted these figures in its recent announcement, providing key insights into the nation’s economic landscape.
Key Inflation Figures for August 2026
A detailed breakdown of the August 2026 inflation data reveals the following:
- Headline Inflation (Y-o-Y): Increased to 8.0% in August 2026 from 7.3% in July 2026.
- Food Inflation (Y-o-Y): Rose sharply to 8.5% in August 2026 from 6.3% in July 2026. This category was the main contributor to the overall increase in headline inflation.
- Non-Food Inflation (Y-o-Y): Decelerated slightly to 7.7% in August 2026 from 7.8% in July 2026.
- Month-on-Month Change: The CCPI increased by 0.28% in August 2026. This was primarily driven by the food category, which contributed 0.20 percentage points, largely due to an increase in milk powder prices. The non-food category contributed a marginal 0.07 percentage points.
- Core Inflation (Y-o-Y): Also accelerated, reaching 5.1% in August 2026 from 4.4% in July 2026.
CBSL’s Outlook and Projections
The Central Bank’s projections from its July 2026 monetary policy round indicate that headline inflation is expected to remain above the target of 5% in the near term. However, it is anticipated to ease and stabilise around the target over the medium term, supported by appropriate policy measures implemented by the CBSL.
These projections are conditional on several assumptions, including the expectation that the effects of tensions in the Middle East and their spillover impacts will be temporary and gradually dissipate. The inflation target of 5% was formally agreed upon under the Monetary Policy Framework Agreement (MPFA) signed between the Central Bank and the Minister of Finance in October 2023.
The continued vigilance on food prices, particularly sensitive items like milk powder, will be crucial in managing inflationary pressures moving forward. The CBSL remains committed to its mandate of price stability, adapting its policy stance as economic conditions evolve.
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