December inflation unchanged at 2.1%

Flood impact seen in monthly prices

• Prices measured on a monthly basis rose by 1.2% in December 2025, from a negative 0.2% in November
• Prices of food rose by 3.9% in December, from a negative 0.6% in November
• Non-food prices rose by 1.8%, tad higher from 1.7% previous month 

The early December floods and landslides have caused the prices to move up a little in the month but the annual prices remained unchanged in a sign that the price pressures broadly remain muted, helping the Central Bank’s medium-term path towards its 5 percent inflation by the second half of 2026.

According to the latest Consumer Price Index, the Colombo prices rose by 2.1 percent from a year ago, unchanged from both October and November levels.

Yet, the prices measured on a monthly basis rose by 1.2 percent in December 2025, from a negative 0.2 percent in November, predominantly on the higher food prices in the month.

The destruction to the food goods and the higher festive demand may have contributed for the prices of food to rise by 3.9 percent in December, from a negative 0.6 percent in November. Measured annually, the food prices rose by 3.0 percent, unchanged from a month ago.

The prices of vegetables and sea fish rose the most, clearly reflecting the impact of the damage caused by the floods. Further, the prices of rice, chicken, eggs, big onions, green chilies and the likes rose in December from November levels.

The prices of coconuts, fresh fruits and limes declined.

The non-food prices rose by 1.8 percent, tad higher from 1.7 percent through November.

However, the prices measured monthly didn’t change at all, as the cut to the petrol prices outweighed any impact from the price rises from other areas.

The Central Bank in November left its key policy rate unchanged at 7.75 percent, as it is confident that the current rates are adequate to take inflation to the desired level of 5 percent by the second half of 2026.

This of course, is with the absence of any exogenous events.

Sri Lanka’s economy is on a path of growth, with macroeconomic stability, low inflation and low interest rates helping the households and businesses to create wealth.