SRI Lanka’s key inflation rate rose to 1.5 per cent year on year in April from 0.9 per cent in March, the statistics department said on Tuesday (Apr 30).

The Colombo Consumer Price Index, a leading indicator for broader national prices, tracks inflation in Colombo, Sri Lanka’s biggest city.

Food prices rose 2.9 per cent in April from 3.8 per cent in March, the Department of Census and Statistics said.

Prices for non-food items rose 0.9 per cent in April from 0.5 per cent in March, with prices remaining low due to a 22 per cent reduction in power tariffs for households implemented in March.

“This is broadly in line with what we are expecting. More than changing prices what we are seeing kicking in is the high base effect from last year,” said Raynal Wickremeratne, co-head of research at Softlogic Stockbrokers.

“After the next three months we expect it to hover around 5 per cent.”

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Sri Lanka racked up record high inflation that peaked at 70 per cent in September 2022 after its economy was pummelled by the worst financial crisis in decades, triggered by a plunge in foreign exchange reserves.

Helped by a US$2.9 billion program from the International Monetary Fund, Sri Lanka’s economy has slowly stabilised and is expected to grow by 3 per cent in 2024 after two years.

Inflation is likely to remain in line with the 5 per cent target in the medium term, Sri Lanka’s central bank said in a report last week.

Taking advantage of receding inflation, the Central Bank of Sri Lanka has reduced policy rates by 700bps since last year to help the island nation’s economy return to growth. REUTERS