The Central Bank of Sri Lanka (CBSL) has projected that deflation will not persist long enough to adversely affect the nation’s production levels. During the 2024 monetary policy review briefing, Assistant Gove or Dr. Chandranath Amarasekara stated, 'We anticipate the end of deflation by the second quarter of next year.'

Addressing conce s about the prolonged impact of deflation, Gove or Dr. Nandalal Weerasinghe remarked that reduced production costs during deflationary periods could potentially enhance corporate profitability.

In a separate update, CBSL announced that Sri Lanka's official foreign reserves have seen significant growth, reducing the need for foreign exchange swaps. Dr. Weerasinghe confirmed the reserves' adequacy to sustain liquidity without exte al reliance.

In addition, K.V.K. Alwis, Director of the Payments and Settlements Department, revealed ongoing discussions with Indian authorities about a new payment system for Sri Lankans traveling to India. The proposed system would enable payments in Sri Lankan rupees, akin to the Unified Payments Interface (UPI) system currently used by Indian travelers in Sri Lanka.

November’s consumer price index showed a deflation of 2.1%, marking the steepest decline since 1961, according to official data. The CBSL attributes this trend to lower energy costs and a drop in volatile food prices, stating that headline inflation would likely remain negative for the coming months. Nonetheless, inflation is expected to stabilize at the target rate of 5% as market adjustments take effect.