🇱🇰 📈 Sri Lanka Risks Higher Inflation If Elevated Global Oil Prices Prolong: CBSL Governor

• Headline Inflation: CCPI inflation reached a 40-month high of 8.1% in September, heavily driven by market-reflected fuel prices and domestic spillover effects. • Oil Price Volatility: Ceylon Petroleum Corporation (CPC) has raised fuel prices by ~50% since the Middle East conflict began. • CBSL Baseline Outlook: Central Bank originally projected global crude to settle around $90/barrel by year-end. Even at ~$100/barrel, CBSL expects to manage inflation at current levels in the short term. • Long-Term Shock: Extended periods of high oil prices will trigger cost-push supply-side shocks across domestic supply chains, pushing headline inflation higher. • Transmission Mechanism: High oil import bills escalate operational and transport costs across manufacturing, agriculture, and freight transport, directly raising consumer prices for essentials and energy tariffs under IMF-mandated market pricing. • Monetary Response: CBSL is monitoring whether cost-push inflation impacts future expectations or triggers demand-driven pressures before altering monetary policy.