Sri Lanka’s inflation hits 6.8-pct in June

Sri Lanka’s inflation problem isn’t going away anytime soon. June’s headline number came in at 6.8% year-on-year, up from 5.5% in May, and the drivers are exactly what most people already feel when they fill up their tank or do their weekly grocery run.

Energy costs remain the main villain here. The Middle East conflict continues to push domestic fuel and electricity prices higher, and that pressure is bleeding into almost every other category. Non-food inflation hit 8.4% for the month but what’s new in June is that food is no longer holding the line either. Food inflation jumped from a relatively calm 0.9% in May to 3.6%, with fish and vegetable prices doing much of the damage. On a monthly basis, prices rose 2.1% the sharpest single-month move in recent memory.

Look at the category breakdown and it gets starker. Transport costs are up nearly 19% year-on-year. Restaurants and hotels, 14%. Housing, utilities, and fuel, close to 7%. For ordinary households, this isn’t a data point it’s a difficult month.

The Central Bank is flagging that inflation will likely stay above the 5% target for a while yet before settling down, and that’s assuming things don’t get worse externally. That’s a fair assessment, but it’s also cold comfort for anyone watching their cost of living climb while wages haven’t kept pace.

Just over a year ago, Sri Lanka was actually recording negative inflation. That recovery has taken a knock and how long this episode lasts depends largely on factors well outside Colombo’s control.