By The Pulseline News Desk
Sri Lanka’s headline inflation has accelerated to 8.3% in October 2026, its highest level in more than three years, further exceeding the Central Bank’s upper inflation tolerance level as rising transport and restaurant costs continued to drive price pressures.
Inflation, measured by the Colombo Consumer Price Index (CCPI), has increased from 8.0% in September to 8.3% in October, remaining above the Central Bank’s upper tolerance limit of 7% for the fourth consecutive month, according to data released by the Department of Census and Statistics.
The CCPI for all items has increased to 209.9 in October from 209.1 in September, representing a monthly rise of 0.4%.
The increase in the index translated into an additional expenditure of Rs.666.63 on the market basket, compared to the previous month, the Department has said.
Food inflation, measured year-on-year, has edged up to 8.8% in October from 8.7% in September, reaching its highest level since May 2023.
Non-food inflation has also accelerated, rising to 8.0% from 7.7% in the previous month, indicating that price pressures are extending beyond food commodities.
The Restaurant and Hotels category and Transport together have accounted for 87% of the monthly increase in the overall price index, highlighting the impact of higher service and transportation costs on household expenditure.
Core inflation, which excludes certain volatile price categories, has also increased to 5.6% in October from 5.4% in September, reaching a level not seen in more than three years.
The latest acceleration in inflation comes amid successive domestic fuel price adjustments following supply disruptions linked to escalating tensions in the Middle East and higher international oil prices.
The Government last increased fuel prices with effect from October 1, following earlier adjustments that significantly raised domestic petroleum prices. Higher fuel costs have also contributed to increased transportation and operating expenses, creating additional pressure on prices across the economy.
The inflation figures present a challenge for monetary policymakers as the Central Bank seeks to contain price pressures while supporting the country’s economic recovery.
At its latest monetary policy review in September, the Central Bank has maintained the Overnight Policy Rate (OPR) unchanged, while indicating that inflation could remain at elevated single-digit levels during the first quarter of 2027.
The Central Bank expects inflation to gradually moderate towards its 5% target thereafter.
However, the October figures suggest that the impact of higher fuel prices and their spillover effects on transport, services and other consumer prices continue to weigh on the cost of living.
The persistence of inflation above the Central Bank’s tolerance range will remain a key concern for households and businesses, particularly as higher operating costs feed into the prices of goods and services.
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