Sri Lanka Warns of Rising Inflation

Sri Lanka’s Central Bank has cautioned that inflation could reach around 7% if global fuel prices remain high due to the ongoing Middle East conflict. Dr. Nandalal Weerasinghe, the Central Bank Governor, shared this warning during an interview with a local news channel. He explained that rising energy costs are adding pressure on the economy, which is still trying to recover from its worst economic crisis in 2022.

Currently, inflation is estimated at about 5.4% to 5.5%. However, it could increase further if crude oil prices stay high and domestic demand continues to grow. The Governor emphasized that prolonged instability in West Asia has disrupted global energy markets, leading to higher fuel prices. This situation poses significant risks for countries like Sri Lanka, which rely heavily on imports.

To address these challenges, the Central Bank has recently tightened its monetary policy as a precautionary measure. Dr. Weerasinghe stressed the importance of controlling domestic demand in the coming months to avoid a sharper rise in prices and maintain economic stability.