Sri Lanka's inflationary trajectory claimed to -1.9%, a significant rise from the -3.9% recorded in February, data from the Central Bank of Sri Lanka has shown. 

This uptick in inflation follows a prolonged period of deflation that has characterised much of the post-crisis economic recovery.

The ongoing deflation was primarily driven by a sharp contraction in domestic demand, falling global commodity prices, and monetary tightening aimed at stabilising the rupee.

However, this downward pressure has begun to ease, with March’s figures suggesting that consumer prices are gradually stabilising.

Food prices, a crucial component of the consumer basket, shifted back into positive territory with food inflation rising to 0.8% in March from -1.1% the previous month. 

Non-food inflation, although still negative, also showed signs of narrowing, moving from -6.0% in February to -4.1% in March. Food contributed 0.35 percentage points to the overall inflation in March, reflecting increased household expenditure on essential items.

The NCPI for all items in March was recorded at 206.0, marking a marginal drop of 0.2 index points compared to February. 

While this decline indicates that prices are still adjusting downward, the slower rate of decline reinforces the notion that Sri Lanka may be entering a transitional phase out of deflation. 

For businesses, this emerging inflationary shift could influence pricing strategies, cost forecasts, and investment decisions, especially in sectors sensitive to consumer demand and input costs.

As inflation trends continue to evolve, policymakers and business leaders alike will be closely monitoring future data to gauge the pace and sustainability of this economic normalisation.