In January, Sri Lanka experienced a significant inflationary uptick, with a year-on-year expansion of 6.5 percent, largely attributed to price hikes across various sectors due to the impact of a higher Value Added Tax (VAT) and disruptions in the supply chain caused by adverse weather conditions.
Monthly figures from the National Consumer Price Index revealed a notable 3.0 percent increase compared to the previous month, marking the highest surge recorded in over a year, signaling ongoing inflationary pressures.
This rise follows closely on the heels of the Colombo Consumer Price Index, released three weeks prior, which reported a January reading of 6.4 percent, up from 4.0 percent in December.
Authorities had anticipated inflation to hover around 7.0 percent in both January and February, in line with recent trends.
Core national prices, excluding volatile categories such as food, energy, and transport, rose by 2.2 percent year-on-year in January, indicating underlying inflationary trends and serving as a key metric for policymakers.
Food prices saw a notable acceleration, increasing by 4.1 percent in January compared to 1.6 percent in December, with most commodities experiencing price hikes.
Non-food inflation, capturing energy and services, surged by 8.5 percent annually, with housing rent, petrol, and L.P. gas prices driving the increase. Monthly non-food prices also rose sharply by 3.2 percent.
The uptick in recreational spending as people venture out more frequently further contributed to non-food price pressures, particularly evident in rising expenses at restaurants and hotels.
Education costs also weighed heavily on households, with tuition fees experiencing a sharp rise in January.
