Sri Lanka, Feb. 24 -- Inflationary pressures subsided in January 2026 following a spike in December caused by festive demand and crop damage from floods. National prices rose by 2.4% over the 12 months ending in January, marking a decrease from the 2.9% recorded in the previous month.

The Central Bank expects inflation to reach its 5% medium-term target by the second half of this year. While the bank maintains this target, the Central Bank Act of 2023 allows for a 2% margin in either direction. There are also indications that the bank may review this target since inflation has consistently stayed below the desired level for the past three years.

Food inflation dropped to 3.4% year-on-year in January, down from 4.4% in December. While t...