Price drops continue to cool Colombo inflation in October

• CCPI records -0.8% in October 
• Index fell to 189.9, from 190.9 in September
• Core inflation eased slightly to 3.0% YoY, down from 3.3% in September

Inflation in Sri Lanka’s Colombo district fell further in October, marking the third consecutive month of easing, with both food and non-food prices declining amid the improved supply conditions and reduced administrative costs, according to the data from the Census and Statistics Department.

The Colombo Consumer Price Index (CCPI), the primary inflation gauge, recorded a year-on-year (YoY) decline of 0.8 percent in October, a sharper decrease than the 0.5 percent dip observed in September. Monthly inflation also decreased by 0.5 percent, as the index fell to 189.9, from 190.9 in September.

The food prices rose 1.0 percent from a year ago but declined on a month-on-month basis, contributing -0.20 percent to the monthly index change. The non-food prices recorded a 1.6 percent decline on a YoY basis, with a -0.33 percent contribution to the monthly index change. The repeated cuts to the fuel prices and water tariffs over the recent months continued to reduce the cost pressures across the consumer categories, offering relief to the households that have endured elevated inflation over the past three years.

Core inflation, which excludes the volatile items such as food, energy and transport, eased slightly to 3.0 percent YoY, down from 3.3 percent in September. On a monthly basis, core inflation decreased by 0.1 percent.

The reductions in essential costs, particularly in fuel and utilities, have helped offset the increases in the other categories, such as education and healthcare, limiting the overall impact on the household budgets. 

The Central Bank of Sri Lanka recently indicated that while inflation is likely to remain subdued in the near term, due to these downward adjustments, it anticipates inflation will converge toward and possibly exceed its medium-term target of 5.0 percent by the second half of 2025.