Sri Lanka’s Colombo Consumer Price Index rose 2.1% year-on-year in December, after a 2.1% rise in November, the Statistics Department said on Wednesday. The Colombo Consumer Price Index, a leading indicator for broader national prices, tracks inflation in Colombo, Sri Lanka’s biggest city. The annual inflation rate in the food category was 3% inDecember, mirroring 3% in November. In the non-food category,  consumer prices were up 1.8% year-on-year this month, versus 1.7% in November. “This is broadly in line with expectations. We expect inflation to be 2.4% in January and hover between 2%-3% for the first half of next year,” said Dimantha Mathew, head of research at First Capital. Sri Lanka’s consumer prices rise 2.4% on-year in November Sri Lanka’s inflation was forecast to reach 5.4% at the end of 2026 in the latest International Monetary Fund report, slightly higher than the 5% projection from the country’s central bank. Inflation may edge up, three analysts said, after the island nation was hit by Cyclone Ditwah at the end of November, which killed over 600 people and caused about $4.1 billion in damage, according to World Bank estimates. “Inflation may rise faster month-on-month but it will be moderated by deflation seen in early 2025. We expect inflation to end 2026 at 4.9%,” Mathew added. Helped by a $2.9 billion IMF program, Sri Lanka is recovering from a severe financial crisis triggered by a shortfall of foreign reserves that peaked in 2022.