Colombo consumer prices fall 0.6% in June

• Potentially marks end to deflationary spell 

Inflation in the Colombo district reached a tad closer to ending the months-long deflation, as the prices fell by 0.6 percent in June 2025 from a year ago, compared to a 0.7 percent decline in the prices in May.

The monthly prices however rose by 0.9 percent, up from 0.8 percent in May, as the hike in electricity tariffs pushed non-food inflation.

The monthly non-food prices rose 0.4 percent in June, compared to negative 0.1 percent in May, as the increase in the electricity tariffs from June pushed the index higher. People’s spending on restaurants and hotels also rose, as the current spell of deflation helped them to increase their spending on discretionary items.

The non-food index measured annually also rose by 2.8 percent, decelerating from 3.3 percent through May.

Meanwhile, the food prices rose 1.8 percent, easing from 2.7 percent, as the prices of coconuts, fresh fruits, vegetables and a few others declined while the prices of fresh fish, chicken, eggs, green chilies, salt, lime and the likes rose during June.

The food prices measured annually rose 4.3 percent through June 2025, easing from 5.2 percent through May.

The June inflation print could mark the final in its stretch of deflation, which set off in September last year, which was mainly possible from the lower energy, power and utilities prices. The Central Bank in May cut its key policy rate, the overnight policy rate, by 25 basis points to 7.75 percent, to quicken the pace of prices, as its earlier projections pointed to a slower march towards its medium-term target of 5.0 percent.
The Central Bank expects the prices to flip into positive from the beginning of the third quarter this year, before reaching the 5.0 percent level by the end of the year, in the absence of any surprises.

The rise in crude prices by about 10 percent during the 12-day war between Israel and Iran was looking to threaten the price stability, until the two countries agreed to a ceasefire earlier last week.