According to a recent report submitted by the Central Bank of Sri Lanka (CBSL), quarterly headline inflation is projected to reach the target range of 5% ±2% by the third quarter of 2025.
This report, mandated by Section 26(5) of the Central Bank of Sri Lanka Act, No. 16 of 2023 (CBA), was submitted to Parliament due to the Central Bank's inability to meet the inflation target set out in the Monetary Policy Framework Agreement (MPFA) by the stipulated margin for two consecutive quarters.
"The deviation of headline inflation from the target in the second and third quarters of 2024 can be largely attributable to transitory supply-side factors, particularly significant reductions in energy prices," the CBSL said. "The current forecasts suggest that headline inflation will remain low in the coming months as well."
However, with the dissipation of the effects of the supply-side factors along with steady demand-side factors in the period ahead, the CBSL expects quarterly headline inflation to reach levels within ±2 percentage points of the target of 5 per cent by the third quarter of 2025.
The Report is now available for public access:
report_on_deviation_of_inflation_target_Q2_and_Q3_2024_e