CBSL Explains Inflation Target Miss for Mid-2024

COLOMBO (News 1st); The Central Bank of Sri Lanka (CBSL) has released a report detailing the deviation of headline inflation from the targets set in the Monetary Policy Framework Agreement (MPFA) for the second and third quarters of 2024. 

The report, submitted to Parliament through the Minister of Finance, highlights deviations from the inflation targets.

According to the report, headline inflation, as measured by the Colombo Consumer Price Index (CCPI), fell below the target range for two consecutive quarters. 

In Q2 2024, inflation was recorded at 1.4%, and in Q3 2024, it further decreased to 0.8%. 

These figures are notably lower than the stipulated targets, prompting the CBSL to provide an explanation for the deviation.

The CBSL attributed the lower-than-expected inflation rates to several factors, including reduced demand pressures, lower global commodity prices, and weather conditions.

The report also outlines the measures taken by the CBSL to address the deviation and ensure inflation returns to the target range in the coming quarters.

Quarterly headline inflation is expected to gradually return to the target range by the third quarter of 2025.

Monetary easing and price normalisation are expected to drive headline inflation toward the target, while core inflation is expected to stabilise over the medium term.

The release of this report is in compliance with Section 26(5) of the Central Bank Act, which mandates the CBSL to report any significant deviations from the inflation targets to Parliament and the public. 

The full report is available on the CBSL website for public access[1](https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/pr/

press_20250123_report_on_the_deviation_of_headline_inflation_from_the_

inflation_target_set_out_in_the_monetary_policy_framework_agreement_e.pdf).