The Central Bank of Sri Lanka (CBSL) expects inflation to peak to around 75 percent in the fourth quarter of this year before starting to decline from the beginning of next year.
According to CBSL projections, headline inflation is set to decline throughout the next year driven by an anticipated fall in global commodity prices and subdued aggregate demand stemming from monetary policy tightening. Accordingly, inflation is set to return to the CBSL’s target band of 4% – 6% by 2025.
In June, CCPI-based headline inflation and core inflation accelerated by 54.6 percent and 39.9 percent, respectively.
However, the CBSL is concerned on delays in the implementation of fiscal measures and State-Owned Enterprises reforms, which could pressure the CBSL to loosen up monetary policy, through money printing, leading the country to a hyper inflation enviorement.