Inflation rises to 7.3% in July as trade deficit widens – CBSL

Sri Lanka’s headline inflation accelerated to 7.3% in July 2026, while the country’s merchandise trade deficit widened sharply during the first half of the year, according to the Central Bank of Sri Lanka’s latest Weekly Economic Highlights.

The report said the Colombo Consumer Price Index (CCPI, 2021=100)-based headline inflation increased from 6.8% in June to 7.3% in July. Food inflation stood at 6.3%, while non-food inflation reached 7.8%. Core inflation also edged up to 4.4% from 4.0% recorded in June.

In the real sector, the Purchasing Managers’ Index (PMI) for the construction industry expanded in June on a month-on-month basis, reflecting improved activity. The external sector showed that Sri Lanka’s merchandise trade deficit widened to US$5.49 billion during the first half of 2026 from US$3.27 billion in the corresponding period of 2025. Export earnings increased 6.3% year-on-year to US$6.9 billion, while import expenditure surged 26.9% to US$12.39 billion. The country’s official reserves were provisionally estimated at US$6.46 billion at the end of June, while the rupee had depreciated by 7.8% against the US dollar as of July 31.

In the monetary sector, the Weekly Average Weighted Prime Lending Rate increased by 21 basis points to 10.67%, while the Average Weighted Call Money Rate rose marginally to 9.01%. Market liquidity recorded a surplus of Rs.183.34 billion. Meanwhile, Treasury bill and bond yields remained broadly stable during the week, with Treasury bill and bond auctions recording oversubscriptions of approximately 2.1 times and 2.4 times, respectively. Foreign investor holdings of government securities also increased during the reporting week.

Source: Daily News