Headline inflation in Colombo was unchanged at 8.0% in September, holding at a 37-month high and breaching the Central Bank’s 7% upper target band for a third consecutive month, figures released by the Department of Census and Statistics show.
The Colombo Consumer Price Index stood at 209.1 for all items in September, up 0.3 index points or 0.1% from 208.8 in August. The statistics department put that in household terms: it “represents an increase in expenditure value of Rs. 358.48 in the market basket,” EconomyNext reported.
The flat headline figure conceals a divergence underneath it.
Food is still accelerating
Year-on-year food inflation rose to 8.7% in September from 8.5% in August — its highest level since May 2023 — and was the main contributor to the headline rate. Non-food inflation was steady at 7.7%. Hiru News’s business desk reported the same split from the department’s release.
More significant for policy is core inflation, which strips out volatile food and energy prices and is read as a gauge of underlying price pressure. It accelerated to 5.4% from 5.1% — meaning the inflation that remains once the fuel shock is excluded is still building, not fading.
Where it came from, and where the Bank thinks it goes
The current episode traces to the government raising fuel prices by close to 50% after the Middle East escalation disrupted supply and pushed global oil prices up. Inflation has been above the Central Bank’s 7% ceiling since July, having hit 8% in August from 7.3% in July. The Bank’s target is 5%, with a band of 3% to 7%.
The Central Bank kept its Overnight Policy Rate unchanged at Wednesday’s review and said it expects inflation to stay in the higher single digits through the first quarter of 2027 before easing to 5% after that. Governor Dr. Nandalal Weerasinghe told the same briefing that the government’s fuel subsidy and its surcharge on vehicle imports had kept the rate lower than it would otherwise have been, and that vehicle import demand is now cooling.
That forecast puts roughly two more quarters of above-target inflation on the record before the Bank expects relief — and the September reading, with food and core both rising while the headline stood still, is the kind of month that will test it.
