Sri Lanka Inflation Rate Slows in February

Annual inflation in Colombo, Sri Lanka’s capital, slowed to 1.6% in February 2026, its lowest level in five months, after rising to 2.3% in January which was the highest since July 2024. Food prices increased 0.2%, the least in a year, compared to a 3.3% rise in January while non-food cost increased at a faster 2.3% compared to 1.8% in January. Largest upward contributions came from cost of housing and utilities, restaurants and hotels, education, health and clothing and footwear. Compared to the previous month, the CPI declined 0.9%, the most since August 2024, following a 0.6% increase in January.

Annual inflation in Sri Lanka’s capital, Colombo, rose to 2.3% in January 2026, the highest level since July 2024, up from 2.1% in December. Food inflation edged up to 3.3% from 3.0% in both November and December, despite the impact of November’s cyclone and subsequent floods, which caused significant damage to crops and infrastructure. Higher prices for sea fish, milk powder, chicken, and dried fish were partially offset by a decline in rice. Non-food inflation remained at 1.8% for the second consecutive month, driven by increases in housing and utilities, restaurants and hotels, education, health, and clothing and footwear, while transport prices fell. On a monthly basis, inflation slowed to 0.6% from 1.2% in December.

Sri Lanka’s annual inflation in the capital, Colombo, remained unchanged at 2.1% in December 2025, its highest level since July 2024 but below market expectations of 2.4%. This marks the third consecutive month at this level. Food prices contributed 0.97 percentage points to the annual increase, led by coconuts (+0.28 pp), milk powder (+0.28 pp), vegetables (+0.44 pp), sea fish (+0.40 pp), and coconut oil (+0.13 pp), while rice, big onions, dhal mysoor, yoghurt, and sugar saw notable declines. Non-food categories added 1.18 points, with education (+0.27 pp), restaurant and hotel services (+0.26 pp), health (+0.19 pp), furnishings and maintenance (+0.12 pp), and clothing (+0.11 pp) as main contributors. Downward pressures came from petrol (-0.20 pp) and electricity (-0.19 pp). On a monthly basis, consumer prices rose 1.2% in December, rebounding from a 0.2% decline in November.