# Sri Lanka economic and inflation trends > Live situation record from CLSTR: https://clstr.news/situations/sri-lanka-economic-and-inflation-trends > Updated: 2026-08-14T04:55:19.000Z. Sources: 2. Developments: 2. Sri Lanka has experienced rising inflation throughout the first half of 2026. In July, headline inflation reached 7.3% year-on-year, exceeding the central bank’s 5% medium-term target. This acceleration followed a period in the first quarter where inflation averaged approximately 2%. The Central Bank of Sri Lanka (CBSL) attributed the upward trend to domestic fuel adjustments and global energy price shocks. To address these pressures, the CBSL implemented a 100-basis-point rate hike in May 2026, ending an accommodative monetary policy period that had lasted since mid-2023. While inflation remains elevated in the short term, officials expect it to return to the 5% target over the medium term. Economic indicators show a real GDP growth of 5.1% in the first quarter of 2026. Despite challenges in the external sector, such as a current account deficit driven by increased vehicle imports and geopolitical tensions, the economy has been supported by remittances and revenue-based fiscal consolidation. Additionally, gross official reserves were reported at approximately US$6.45 billion at the end of June, with projections to exceed US$8 billion by the end of the year. ## Timeline ### 2026-08-14: Central Bank of Sri Lanka releases August 2026 Monetary Policy Report The Central Bank of Sri Lanka's August 2026 report projects elevated inflation in the near term and notes a 5.1% GDP growth in Q1, following a decisive tightening of monetary policy in May. 2 sources. https://clstr.news/cluster/central-bank-of-sri-lanka-releases-august-2026-monetary-policy-report ### 2026-08-02: Sri Lanka's Inflation Rises to 7.3% in July as Construction Activity Expands Sri Lanka’s construction PMI hit 60.0 in June amid material and labor shortages, while July inflation rose to 7.3% with food prices up 6.3% and the central bank sees tightening easing demand. 5 sources. https://clstr.news/cluster/sri-lankas-inflation-rises-to-73-in-july-as-construction-activity-expands --- Cite as: Sri Lanka economic and inflation trends. CLSTR, https://clstr.news/situations/sri-lanka-economic-and-inflation-trends