In line with the Central Bank’s near term projections, deflationary conditions commenced easing in March. Headline inflation, as measured by the year-on- year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100) 1 remained in the negative territory for the seventh consecutive month, yet recorded a slower deflation of 2.6% in March 2025 compared to the deflation of 4.2% recorded in February 2025.
Non-Food deflation (Y-o-Y) decelerated to 4.1% in March 2025 from 6.1% in February 2025. Food category recorded an inflation (Y-o-Y) of 0.6% in March 2025 compared to the deflation of 0.2% recorded in February 2025.
On a month-on-month basis, the CCPI decreased by 0.31% in March 2025 due to the combined effect of a 0.43% decrease in the prices of items in the Food category and a 0.12% increase in the prices of items in the Non-Food category. Meanwhile, core inflation (Y-o-Y), which reflects the underlying inflation trends in the economy, remained unchanged from the previous month at 0.7% in March 2025.
The realised quarterly average headline inflation for Q1-2025 is in line with the Central Bank’s inflation projections. Looking forward, deflationary conditions are expected to ease further in the coming months, with inflation projected to turn positive by mid-2025 and gradually converge to the targeted level of 5% over the medium term, aided by appropriate policy measures.