Prices are rising 8% a year. Why the Central Bank is holding still

Inflation is at its highest in three years, driven by energy. The Central Bank has decided to wait.

Prices in Colombo rose 8.0% in the year to September, the same as in August, according to figures from the Department of Census and Statistics released on 30 September. That is the Colombo Consumer Price Index, the measure most people mean when they talk about inflation.

How we got here

Inflation has climbed through the year. It was 6.8% in June and 7.3% in July, which at the time was the highest reading since June 2023. The Central Bank says the main cause is an energy price shock, which then spreads into transport, food and almost everything else.

Why rates didn’t move

On the same day, 30 September, the Central Bank of Sri Lanka kept its Overnight Policy Rate at 8.75%. It raised rates by a full percentage point in May and says it wants to see how much of that has worked through before acting again. It also named tension in the Middle East and the risk of El Niño weather as reasons for caution.

The Bank expects inflation to stay in the high single digits until early 2027 and then ease back towards its 5% target. It says it will take a “forward-looking and data-dependent approach” and act if price pressures get worse.

What it means for you

If you live in Colombo, the weekly shop and the electricity bill are where you feel this most. If you send money home from Melbourne, the same rupees buy less than they did a year ago, so your family may need a little more to cover the same costs.

Sources: Department of Census and Statistics, CCPI, September 2026, as reported by Newswire, 30 September 2026; Central Bank of Sri Lanka policy decision, as reported by Newswire, 30 September 2026; Daily Mirror, 3 August 2026.