CBSL says deflation to end in 3Q 2025

Saturday, 16 August 2025 00:16 - - {{hitsCtrl.values.hits}}

Says deflationary period since September 2024
Inflation to reach 5% mid-2026
Projects 4.5% economic growth for 2025

The Central Bank of Sri Lanka (CBSL) on Friday said it projected Sri Lanka’s economy to grow 4.5% in 2025, with the deflationary period to end in the third quarter this year and inflation expected to return to the 5% target by mid-2026.

Deflation that began in September 2024 is expected to end by the third quarter of 2025, the CBSL said, announcing the release of its second Monetary Policy Report for 2025. The first was issued in February.

Released under the Central Bank of Sri Lanka Act, No. 16 of 2023, the biannual report contains forward-looking assessments about inflation, growth, and risks, and explains recent policy decisions in an attempt to improve transparency and accountability.

The Central Bank said it has maintained its monetary policy stance due to subdued demand-driven inflationary pressures. Core inflation is expected to rise gradually and then stabilise in line with the headline target.

The report notes evolving global uncertainties that could challenge growth prospects. Projections are based on information considered by the Monetary Policy Board at the July 2025 review. The report is available on the Central Bank’s website: https://www.cbsl.gov.lk/en/publications/economic-and-financial-reports/monetarypolicy-reports