Sri Lanka’s consumer prices fell 3.9% year-on-year in February after a 4% decline in January, official data showed on Friday, as the country’s economy recovers from its worst financial crisis in decades. The National Consumer Price Index captures broad retail price inflation and is released with a lag of 21 days every month. Prices in the food category declined 1.1% in January, compared with a 2.5% fall in December. In the non-food category, prices fell 6% this month, compared to a decline of 5.2% the previous month. Sri Lanka’s economy grew 5% last year, the Department of Census and Statistics said on Tuesday, beating forecasts, and marking a strong rebound for the island nation. “We are looking at inflation remaining negative till June-July and then reaching positive territory,” said Dimantha Mathew, head of research at First Capital. Sri Lanka’s economy grew 5pc in 2024 “Inflation may reach 5% or more towards December.” Buoyed by strong growth and low inflation the Central Bank of Sri Lanka (CBSL) is expected to keep policy rates unchanged at 8% for a second time next week. CBSL slashed policy rates by 125 bps last year, as the country focused on a robust turnaround helped by a $2.9 billion program from the International Monetary Fund (IMF).