Inflation to ease from 7.1% to around 5% soon: CBSL

Sri Lanka recorded economic growth of 5.1% in the first quarter of 2026, and this is expected to improve further provided the country does not face any additional external shocks, Central Bank officials said at a special awareness press conference this morning.

They said potential risks include a renewed escalation of hostilities in the Middle East, which could push up energy prices and create other economic pressures, as well as an acceleration of the El Niño effect, which could negatively impact the agriculture sector.

The increase in private sector credit, along with several projects getting underway, is also expected to support economic activity and contribute to higher economic growth, the officials said.

Meanwhile, inflation, which rose from 1.8% in February 2026 to 7.1% last month, is expected to moderate to around 5% in the near term.

Commenting on fluctuations in the US dollar, the Central Bank of Sri Lanka (CBSL) said the rupee has appreciated in recent months.

“Many factors contribute to this, and positive speculation also helps create a stronger rupee. This is also happening now,” officials said.

Asked to predict the dollar rate by the end of the year, CBSL Deputy Governor C. Amarasekara said that under the Central Bank’s new regulations, the institution does not comment on future exchange rate predictions.