Food and energy costs push Sri Lanka inflation to 6.8% in June

Headline inflation accelerated further in June, rising above the Central Bank’s 5 percent target as higher domestic energy prices linked to the Middle East conflict continued to feed through to the economy.

The Colombo Consumer Price Index (CCPI)-based annual inflation rate rose to 6.8 percent in June from 5.5 percent in May. The increase was attributed largely to the impact of continued upward adjustments in domestic energy prices.

This is the third consecutive month of accelerated inflation, following rates of 5.4 percent in April and 5.5 percent in May.

Non-food inflation climbed to 8.4 percent in June from 7.8 percent a month earlier, while food inflation accelerated sharply to 3.6 percent from 0.9 percent.

On a month-on-month basis, consumer prices increased by 2.1 percent in June, up from 0.9 percent in May.

The food category accounted for the largest share of the increase, contributing 1.4 percentage points, mainly due to higher prices of fish and vegetables. Non-food items contributed a further 0.7 percentage points.

Core inflation, which excludes volatile items and is closely watched as an indicator of underlying price pressures, edged up to 4.0 percent in June from 3.9 percent in May.

Among major expenditure categories, transport recorded the highest annual inflation rate at 18.7 percent in June, followed by restaurants and hotels at 11.9 percent and housing, water, electricity, gas and other fuels at 6.9 percent. Food and non-alcoholic beverages inflation rose to 3.6 percent from 0.9 percent in May.

The Central Bank in a statement said realised average inflation during the second quarter of 2026 remained broadly in line with its projections released during the May monetary policy review.

It reiterated that inflation is likely to remain above the 5 percent target in the near term before easing and stabilising around the target over the medium term, supported by appropriate policy measures. 

However, the it went on to caution that the inflation outlook remains highly uncertain due to the evolving nature of tensions in the Middle East and their potential impact on both global and domestic economic activity.