Christmas cake inflation 4.4-pct in 2025 amid rupee depreciation

ECONOMYNEXT - Inflation measured by the Sri Lanka Christmas cake, widely acclaimed to be the world's most delicious, rich, 'decadent' and interesting confection of its kind, has risen by 4.4 percent in 2025, amid rupee depreciation, an analysis of retail prices show.

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The cost of 11 key ingredients rose to 15,180 rupees by 2025, up from 14,744 in 2024 with rupee inflating 5.3 percent.

In the 12 month to November, the rupee fell from 290.90 rupees to 306.30 to the US dollar, as the central bank selectively denied convertibility to private citizens and bought dollars in excess of deflationary policy, pushing the unfortunate currency down.

Sri Lanka's currency is inadequately protected from discretionary central bank action (flexible exchange rate) analysts have said.

But over 24 months the Sri Lanka (World's Most Delicious) Christmas Cake Index showed deflation of 4.6 percent.

The Colombo Consumer Price Index rose 2.1 in the 12-months to November 2025. In the 24 months to November 2025, the index was unchanged at 193.4 points, showing zero inflation.

In 2025 Sri Lanka's central bank avoided inflationary open market operations and ran a classical style scarce reserve regime, giving stability to domestic prices and missed its inflation target.

The central bank but cut rates in May which analysts said reduced the 'buffer' to collect reserves and repay debt, by driving up private credit.