National consumer prices rise 0.6% in June on electricity tariff hike

 Prices measured on an annual basis rose by 0.3% in June

• National food prices rose by 0.8%, from 1.2% increase in May
• Non-food prices rose by 0.3%, from negative 0.1% in May

Sri Lanka’s consumer prices, measured nationally, rose by 0.6 percent in June from a month ago levels, picking up from 0.5 percent in May, as the upward revision to the electricity prices in June sent the non-food prices higher.

Sri Lanka raised the electricity prices by 15 percent on average, effective from June 12, to reflect the generation and distribution costs of electricity, after the International Monetary Fund made it a condition to complete the fourth review and to release the fifth programme tranche earlier this month. 

Meanwhile, the prices measured on an annual basis rose by 0.3 percent in June, easing from the 0.6 percent increase seen in the 12 months through May 2025.

Sri Lanka effectively ended its eight-month-long deflation in May, based on the National Consumer Price Index, with a positive inflation reading coming in for the month but the Colombo district prices still came down by 0.6 percent in June.  

There is roughly a three-week lag between the two inflation reports, as the Colombo Consumer Price Index comes early, at the end of each month, offering a leading indicator of the behaviour of the prices in that particular month.

However, it is largely expected that June’s was the last negative inflation print in the current deflationary spell, as the prices in the Colombo district are also expected to turn positive from July.

Colombo inflation is what the policymakers widely use for their policymaking as their consumer price gauge.  

The Central Bank surprisingly cut the Overnight Policy Rate, its key policy rate, by 25 basis points to 7.75 percent in May, to quicken the pace of prices to return to positive, as its earlier projections had shown a much slower march towards its medium-term target of 5.0 percent.

The Central Bank is now confident inflation would return to its target level by the end of this year and sees more room to cut rates.

The next monetary policy meeting is due tomorrow and it is still uncertain as to what the Monetary Policy Board would do on the rates.  

In June, the national food prices rose by 0.8 percent, from a 1.2 percent increase in May while the prices measured on an annual basis rose by 4.2 percent, slowing from 5.9 percent through May.

Meanwhile, the non-food prices rose by 0.3 percent in June, turning from a negative 0.1 percent in May, due to the aforementioned electricity tariff revision.

The annually measured non-food prices still declined 2.8 percent in June, from the 3.4 percent decline seen through May 2025.