Sri Lanka's consumer prices creep up, signaling renewed inflationary pressure

Sri Lanka's financial markets are flush with cash, with the Central Bank reporting a significant increase in market liquidity.

- By SANATH NANAYAKKARE

The total outstanding market liquidity hit a surplus of Rs. 116.40 billion by August 22, up from a surplus of Rs. 88.33 billion the previous week.

This signals a healthy amount of cash in the system, which can help support lending and investment activities.

However, while liquidity increased, inflation showed an uptick. The National Consumer Price Index (NCPI)-based inflation rose to 0.7% in July, compared to 0.3% in June. This was driven by a 2.2% increase in food prices, while nonfood prices experienced a slight drop of 0.6%. Core inflation also crept up to 0.9% in July. The rise in prices, though small, suggests that the cost of goods and services is beginning to increase again.