Sri Lanka’s national consumer prices rose by 2.1 percent in the twelve months through September 2025, up from 1.5 percent in August, reflecting a steady pickup in inflation in line with the Central Bank’s expectations.
According to the National Consumer Price Index (NCPI), monthly inflation also turned positive, rising 0.1 percent in September after a 0.5 percent decline in August — signalling that prices have begun to firm up after nearly a year of deflation.
The Central Bank expects inflation to gradually rise towards its medium-term target of 5 percent by mid-2026, assuming no major supply disruptions.
The main driver of September’s increase was food prices, which surged 3.8 percent year-on-year, accelerating from 2.9 percent in August. On a monthly basis, food prices also rose 0.1 percent, reversing a 1.2 percent fall in the previous month.
Notable increases were recorded in staples such as lime, coconuts, milk powder, chicken, and big onions, while vegetables, rice, green chilies, red onions, and eggs saw price declines.
Excluding volatile components such as food, energy, and transport, core inflation climbed to 1.9 percent in September from 1.5 percent in August, indicating underlying price pressures in the broader economy. Core inflation is a key gauge used by policymakers in setting monetary policy.
The Central Bank kept its policy rate unchanged at 7.75 percent during its September meeting, stating that current rates remain appropriate to guide inflation towards target levels.
Meanwhile, non-food inflation increased to 0.7 percent in the year through September, up from 0.4 percent in August. On a monthly basis, non-food prices rose 0.1 percent, unchanged from the previous month.
Although a reduction in fuel prices helped offset some costs, spending rose notably in education, restaurants, and hotels, suggesting that households are beginning to spend more on leisure and services as disposable incomes recover.
