Business
Sri Lanka’s 2.3% inflation is a useful macro indicator, but it acts as a veil, says analyst
Disconnect between national statistics and household sentiment illustrated
Although official data points to a stable headline inflation rate of 2.3%, an independent economic analyst told The Island Financial Review that the public should look beyond this single figure.
Speaking on condition of anonymity, the analyst said, “That 2.3% is a crucial macroeconomic indicator for policymakers, but for the average household, it acts more like a veil. It obscures the sharply different economic realities in different sectors of the economy and, consequently, in different people’s lives.”
“You see, the aggregate is an average, a blend of everything from falling transport costs to soaring medical bills. But no family buys the ‘average’ basket. Your personal inflation rate is dictated by your unique spending pattern, and right now, those patterns are creating winners and losers in a low-inflation environment.”
He illustrated this by taking three contrasting Sri Lankan households.
“Consider a retired couple: their budget is dominated by healthcare, which is inflating at 4.2%, and perhaps occasional treats at restaurants, up 4.0%. For them, the cost of living is rising nearly twice as fast as the headline suggests. That 2.3% figure is of poor comfort to them.”
“Conversely, take a young professional who commutes; they are a direct beneficiary of the 0.9% deflation in transport. Their major expenses – fuel and vehicle maintenance – are supposed to be getting cheaper. Even if education inflation is high, it doesn’t affect them. This individual might feel almost no pinch, experiencing a personal inflation rate of about 1%. The headline number overstates their hardship.”
The analyst expressed his deepest concern for the typical family. “This is where the veil is most dangerous,” he said. “A family with school-going children is hit from multiple sides: Education at 3.9%, daily groceries at 3.3%, and clothing at 3.6%. The slight relief from cheaper transport is negligible against these heavy, non-negotiable expenses. Their budget is being squeezed relentlessly, a pressure the calm 2.3% aggregate completely masks.”
The analyst concluded that this sectoral divergence explains the disconnect between national statistics and household sentiment.
“When people hear ‘inflation is low and stable,’ but feel their wallet straining, it’s not ignorance. It’s because their personal basket is heavy with the sectors that are heating up – essential services, education, and food. The 2.3% is a useful indicator for the economy at large, but it should not blind us to the fact that many families are experiencing a much harder personal financial reality. Lifting that veil is key to understanding the true cost of living.”
by Sanath Nanayakkare
National Development Bank PLC (hereinafter ‘the Bank’) announced its results for the financial year ended December 31, 2025 to the Colombo Stock Exchange recently. Full year results tabled by the Bank showcase a strong growth across all business lines with Net Banking Revenue increasing by a 45.2% on a comparable basis.
Like most other peers, the Bank’s 2024 financial performance was positively impacted following the successful conclusion of the ISB debt restructure with a one-off impact on interest income, fee income and net impairments amounting to LKR 1.4 billion, LKR 0.7 billion and LKR 9.4 billion, respectively for the said year.
Fund based income
Net interest income (NII), which accounts for close to 75.0% of Bank’s total operating income, grew by 6.5% on a normalised basis. Despite pressure on interest-earning assets arising from the lower interest rate environment, the Bank’s disciplined margin management helped stabilise Net Interest Margin (NIM) at 4.0% for the year. On a comparable basis, excluding one-off exceptional items, NIM stood at 4.2%, compared to 4.3% for both scenarios in 2024. By the end of the year, the Bank had close to LKR 29.3 billion in Loans and Deposits under a special arrangement with its customer(s) with a netting-off feature (end 2024: LKR 19.6 billion).
Non-fund based income
Net fee and commission income reached LKR 8.1 billion for the year – representing a growth of 14.3% from LKR 7.1 billion in 2024 excluding ISB restructuring related fees. Key growth drivers for the current year were trade finance, credit and lending, digital banking and credit and debit cards.
Credit and operating costs
Credit costs for the year amounted to LKR 5.7 billion, reflecting a substantial reduction of 57.1% compared to LKR 13.2 billion in 2024, a testament to the Bank’s strong credit underwriting practices and focused efforts on collections and recoveries. The Bank’s success on account of the latter is best reflected in notably improved stage 2 and 3 loan stock which stood at 7.9% and 10.8% respectively at end 2025 as compared with 16.6% and 14.0% at end 2024. Stage 3 provision coverage also saw further improvement to 59.1% from 54.5% during 2024 showcasing the Bank’s prudent management of credit risk.
Operating expenses closed at LKR 19.0 billion for the year, marking a 13.1% YoY increase. This increase was primarily driven by routine staff-related increments and necessary market realignments, along with higher investments in IT infrastructure and business development undertaken during the year.(NDB)
PMF Finance PLC has announced the appointment of Ms. Nishani Perera as a Non-Executive Independent Director, further strengthening the Company’s strategic oversight, governance framework, and board-level expertise as it continues to advance its transformation and long-term growth agenda.
Ms. Perera is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka and brings over 19 years of experience across audit, assurance, advisory, risk management, and corporate governance. She currently serves as Partner – Audit & Assurance at Moore Aiyar and as Director of Moore Consulting (Pvt) Ltd.
Over the course of her career, Ms. Perera has gained substantial exposure to listed companies, banks, finance companies, and other regulated entities. Her areas of expertise include financial reporting under SLFRS/LKAS, audit and risk oversight, regulatory compliance, and the implementation of quality management standards. She has worked closely with Boards of Directors and Audit Committees on matters relating to financial reporting integrity, internal control frameworks, enterprise risk governance, and adherence to evolving regulatory requirements.
Ms. Perera holds a Master of Laws (LL.M.) from Cardiff Metropolitan University in the United Kingdom and a Bachelor of Science in Business Administration (Special) from the University of Sri Jayewardenepura. She is also an Associate Member of ACCA and CMA Sri Lanka, and a Fellow Member of AAT Sri Lanka.
Business
Capital Alliance deepens capital market presence with third Closed-End Fund Listing at the CSE
The units of the “CAL Three Year Closed End Fund” were officially listed on the Colombo Stock Exchange (CSE) recently. Accordingly, a total of 841,263,375 units of the ‘CAL Three Year Closed End Fund’ were listed by Capital Alliance Investments Ltd (CALI), a member of the Capital Alliance Ltd Group (CAL Group). The listing was commemorated by way of a special bell ringing ceremony on the CSE trading floor.
CSE CEO Rajeeva Bandaranaike speaking at the occasion remarked upon the rising demand for Unit Trusts: “When you look at funds, particularly unit trusts in today’s active capital market, we see a lot of domestic interest in the market with more investors entering. Funds, not only fixed income funds but also growth and balanced funds, can be the ideal vehicle through which new investors can enter the market. We see this interest reflected in the success of CAL’s Three Year Closed End Fund. More people are seeking to invest their money through professional fund managers.”
Cuba says it shot dead four people on US-registered speedboat
’Reimagining International Relations from a Global South Perspective’ offers a timely and rigorous contribution, providing key insights into policy, diplomacy, and global governance – PM
Fair weather will prevail over most parts of the island
CID arrests former top military intelligence officer under PTA
Corruption in coal procurement: CP demands action against all responsible
Jaffna University leads campaign against PTA and PSTB
‘Dates have the highest sugar content to fight Coronavirus’
Sunday Island 27 December – Headlines
#SundayIsland 17th December – Headlines
Sunday Island – 28th March
Sunday Island Headlines – 21 March
Sunday Island – 21st February – Headlines
-
Features4 days agoWhy does the state threaten Its people with yet another anti-terror law?
-
Features4 days agoReconciliation, Mood of the Nation and the NPP Government
-
Features4 days agoVictor Melder turns 90: Railwayman and bibliophile extraordinary
-
Features3 days agoLOVEABLE BUT LETHAL: When four-legged stars remind us of a silent killer
-
Features4 days agoVictor, the Friend of the Foreign Press
-
Latest News6 days agoNew Zealand meet familiar opponents Pakistan at spin-friendly Premadasa
-
Latest News6 days agoTariffs ruling is major blow to Trump’s second-term agenda
-
Latest News6 days agoECB push back at Pakistan ‘shadow-ban’ reports ahead of Hundred auction