The Central Bank of Sri Lanka says it expects headline inflation to decelerate further in the coming months.
The Central Bank announcing its Monetary Policy Review for the month of November said supported by favourable supply side developments and tight monetary policy measures, headline inflation pivoted towards the envisaged disinflation path in October 2022, after passing the peak in September 2022.
Accordingly, headline inflation, based on both the Colombo Consumer Price Index (CCPI) and the National Consumer Price Index (NCPI), decelerated, while a deceleration was also observed in core inflation.
The Central Bank noted the deceleration in inflation is expected to continue in the ensuing period, supported by subdued aggregate demand pressures, expected improvements in domestic supply conditions, normalisation in global commodity prices, and the timely passthrough of such reductions to domestic prices, along with the favourable statistical base effect.
The CBSL added that global as well as domestic risks to the inflation outlook in the near term are tilted to the downside, thereby supporting the disinflation path and stabilising inflation at the desired levels towards the end of 2023.