Editing Economy of Sri Lanka (section)

=== Inflation in 2021 ===

'''Colombo Consumer price inflation 2020 : 4.2% April 2021 : 3.9%'''

Inflation in Sri Lanka measured by the Colombo Consumer Price Index grew 6.0% in the 12-months to August 2021 picking up from 5.7 percent in July.<ref>{{cite news |title=Sri Lanka inflation at 3.9-pct in April 2021 |url=https://economynext.com/sri-lanka-inflation-rises-to-6-0-pct-in-august-2021-85647/ |access-date=9 September 2021 |publisher=EconomyNext |date=1 September 2021}}</ref> Inflation was 4.2% in the year to December 2020. In 2019 inflation was 4.8 percent.<ref>{{cite news|url=https://economynext.com/sri-lanka-inflation-reaches-4-2-pct-in-2020-december-77434/|title=Sri Lanka inflation reaches 4.2-pct in 2020 December|newspaper=[[EconomyNext]]|access-date=2 January 2021}}</ref>

The Department of Census Statistics also compiles a National Consumer Price Index which is released with a delay. Inflation measured by the NCPI increased to 6.8% in July 2021 from 6.1% in June 2021, higher than the central bank's target rate<ref>{{cite news |title=Sri Lanka's national inflation rises to 6.8 percent in July 2021 |url=http://www.colombopage.com/archive_21B/Aug23_1629734971CH.php |access-date=10 September 2021 |publisher=ColomboPage.com |date=23 August 2021}}</ref>

Sri Lanka's central bank is targeting inflation at 4-6 per cent in 2021, though the policy will be loose to promote growth. "The Central Bank is of the view that continued support through monetary and fiscal interventions is essential to provide adequate impetus to the economy amidst the challenging domestic and global macroeconomic conditions," Governor W D Lakshman said in January 2021. "Therefore, the Central Bank will continue the prevailing accommodative monetary policy stance in 2021 to ensure the envisaged recovery of economic activity. The Central Bank will continue to remain vigilant but is confident that inflation will remain within the targeted range of 4-6 per cent over the medium-term.<ref>{{cite news |title=Sri Lanka 2020 GDP to shrink 3.9-pct, monetary policy for growth in 2021: CB Governor |url=https://economynext.com/sri-lanka-2020-gdp-to-shrink-3-9-pct-monetary-policy-for-growth-in-2021-cb-governor-77505/ |access-date=10 September 2021 |publisher=Economynext.com |date=4 January 2021}}</ref> But after worsening balance of payments trouble and inflation, rates were hiked in August and the statutory reserve ratio was also raised.<ref>{{cite news |title=Sri Lanka central bank raises overnight policy rate 50bp, SRR 200bp as forex reserves run low |url=https://economynext.com/sri-lanka-central-bank-raises-overnight-policy-rate-50bp-srr-200bp-as-forex-reserves-run-low-85171/ |access-date=10 September 2021 |date=9 August 2021}}</ref>

Sri Lanka used a 'flexible inflation targeting' framework for monetary policy at least until 2019. In 2020 growth took a priority, Governor Lakshman has said as efforts are made to boost output amid a COVID-19 pandemic.<ref>{{cite news|url=https://economynext.com/sri-lanka-policy-to-target-growth-with-inflation-well-behaved-cb-governor-76322/|title= Sri Lanka policy to target growth with inflation 'well-behaved': CB Governor|newspaper=[[EconomyNext.com]]|access-date=3 December 2020}}</ref> Sri Lanka suffered a US$3.2bn balance of payments deficit in 2020 amid monetary easing.<ref>{{cite web |title=External Sector Performance - December 2020 |url=https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/pr/press_20210212_external_sector_performance_2020_december_e.pdf |website=www.cbsl.gov.lk |publisher=Central Bank of Sri Lanka |access-date=9 March 2021}}</ref>