Central Bank expects inflation to remain high at around 8-9% in next few months

Sri Lanka’s Central Bank expects inflation to remain high at around 8-9% in the next few months, before gradually reverting to the desired 4-6% level thereafter.

Releasing the ‘Recent Economic Developments’ report, the Central Bank said that the upward adjustments in retail market prices of some commodities, mainly driven by supply side factors and increased global commodity prices, are likely to increase inflationary pressures in the near term, causing a deviation of headline inflation from the targeted levels.

Addressing near-term transitory supply side pressures require timely measures by the Government, thereby preventing such inflationary pressures from affecting the medium term inflation expectations.

“Measures taken by the Central Bank will help alleviate the buildup of demand side inflationary pressures, alongside the gradual unwinding of the Central Bank’s holding of government securities,” the report said.

“The Central Bank remains committed to maintaining headline inflation in the 4-6% range over the medium term, within the flexible inflation targeting framework by taking preemptive measures, as and when required.”

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