Sri Lanka’s Central Bank foresees deeper deflation ahead
(Photo by Christoph Theisinger on Unsplash)
The Central Bank of Sri Lanka states that the revision of electricity tariffs in January 2025, which was lower than expected, will lead to deeper deflation in the upcoming period compared to previously projected amounts.
However, it also mentions that inflation is expected to turn positive by mid-2025, and with appropriate policy adjustments, the target level of 5% is anticipated to be reached in the medium term.
The Colombo Consumer Price Index (CCPI), which measures headline inflation, showed a negative inflation rate in December 2024 for the fourth consecutive month.
The Central Bank indicates that although demand pressures have decreased, the primary reasons for this negative inflation are the revisions in electricity tariffs and domestic fuel prices.
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