COLOMBO: Sri Lanka’s consumer price inflation eased to minus 0.2% year-on-year in September from an increase of 1.1% in August, official data showed on Monday, as the crisis-hit island nation’s economic rebound continued.

The National Consumer Price Index captures broad retail price inflation and is released with a lag of 21 days every month. The change was largely driven by a slowing in food inflation to 0.5% in September from 2.3% in August, the Department of Census and Statistics said.

Non-food price inflation dropped to minus 0.7% in September from 0.2% the previous month.

Reductions in power tariffs and fuel prices as well as an appreciating rupee have helped reduce inflation to the lowest point in nine years, analysts said.

Sri Lanka records first deflation in 29 years

“We are likely to see inflation close the year at about 1% before picking up gradually from the beginning of next year,” said Shehan Cooray, head of research at Acuity Stockbrokers.

Sri Lanka suffered record inflation after its worst financial crisis in decades pummelled the economy, which has stabilised since it secured a $2.9-billion bailout from the International Monetary Fund (IMF) in March 2023.

The World Bank doubled its forecast for Sri Lanka’s 2024 growth to 4.4% earlier this month.