Sri Lanka's annual inflation rose to 8.3 percent in October, its highest level in 40 months, as a sharp fuel price increase linked to Middle East supply tensions pushed up the cost of living for a fourth straight month above the central bank's ceiling, Reuters reported on Friday.

Source: Reuters via TradingView

The Colombo Consumer Price Index (CCPI) climbed 8.3 percent year on year in October, up from 8.0 percent in September, according to the Department of Census and Statistics. The index itself rose 0.4 percent on the month, to 209.9 from 209.1, the Sri Lanka Chronicle reported, citing the department's figures.

Source: Sri Lanka Chronicle

Food inflation edged up to 8.8 percent from 8.7 percent, its highest since May 2023, while non-food inflation rose to 8.0 percent from 7.7 percent, led by transport costs, which were up 17.6 percent, and restaurant and hotel prices, up 13.4 percent. Core inflation rose to 5.6 percent, also a more-than-three-year high.

Fuel shock behind the rise

Prices have come under pressure after the government raised fuel prices by nearly 50 percent amid supply constraints linked to escalating tensions in the Middle East and higher international oil prices, the Chronicle reported. The most recent fuel increase took effect on October 1.

The Central Bank of Sri Lanka left its Overnight Policy Rate unchanged at its latest monetary policy meeting in September. It expects inflation to stay in high single digits through the first quarter of 2027 before easing towards 5 percent, according to the Chronicle's report of the department's data.

For ordinary households, the figures mean October's basket of everyday goods cost noticeably more than a year earlier, with food and transport — the two items families can least avoid — rising fastest.