Consumer prices in Sri Lanka climbed to an eight-year high of 8 percent in August 2026, driven largely by surging food costs and fuel price increases. The reading marks the second consecutive month the inflation rate has exceeded the Central Bank's 7 percent upper target band.
Sri Lanka's inflation reached 8.0 percent in August 2026, up from 7.3 percent in July, according to data from the Department of Census and Statistics. The Colombo Consumer Price Index rose to 208.8, representing the highest level since at least 2023 and marking the second straight month above the Central Bank's upper inflation target range.
Food inflation emerged as the primary driver of the increase, accelerating year-on-year to 8.5 percent in August from 6.3 percent the previous month. This represents the highest food inflation rate recorded since May 2023. Non-food inflation edged slightly lower to 7.7 percent from 7.8 percent, while core inflation climbed to 5.5 percent from 4.4 percent.
The price pressures reflect broader economic shifts in recent months. According to EconomyNext, the government's decision to raise fuel prices by approximately 50 percent following supply shortages linked to Middle East escalation has contributed to upward price adjustments across the economy. Global oil price movements have compounded domestic inflation challenges.
The Central Bank maintained its Overnight Policy Rate unchanged at its most recent monetary policy meeting. However, the Central Bank Governor has projected that inflation may ease to around 5 percent by year-end, provided average global oil prices stabilize near $80 per barrel. The Department of Census and Statistics noted that the August price increase corresponds to an expenditure value rise of Rs.526.15 in the market basket.