A recent research report released by the Central Bank on Sunday, 15 February, has highlighted a concerning trend in the national economy: the rate of inflation continues to outpace the growth of consumer wages. This disparity has led to a situation where household expenditures are rising faster than incomes, resulting in a significant erosion of domestic purchasing power.
The Widening Gap Between Wages and Prices
According to the report, which analysed data up until December 2025 and compared the July–September quarter with the October–December period, inflation remains stubbornly high. Although there were slight fluctuations throughout the year, the momentum shifted upwards towards the end of the fourth quarter. In December, the inflation rate stood at 8.5%, whereas the wage growth rate remained stagnant at below 8.1%.
This trend has persisted into the new year, with January figures showing a marginal increase in inflation compared to December. The Central Bank noted that while product supply in the market appears adequate, retail prices are not reflecting this surplus. A substantial disconnect remains between wholesale and retail price points, preventing inflation from cooling to expected levels.
Comparative Economic Indicators
The following table illustrates the growing deficit in real wages as inflation began to climb while wage increments decelerated:
| Month (2025) | Inflation Rate (%) | Wage Growth Rate (%) | Real Income Gap (%) |
| July | Variable | 8.19% | Base Reference |
| October | 8.17% | 8.00% | -0.17% |
| December | 8.50% | < 8.10% | -0.40% (approx.) |
| January (2026) | Rising | Unchanged | Widening |
Institutional Concerns and Policy Recommendations
The Central Bank’s findings suggest that the stagnation of “real wages”—wages adjusted for inflation—is creating a slowdown in the broader economy. To rectify this, the report stresses the necessity of government intervention to restore discipline in market management.
To achieve a long-term, inclusive, and stable macroeconomic environment, the report identifies several critical areas for reform:
Market Discipline: Addressing the irrational price gap between wholesalers and retailers.
Food Security: Controlling the volatile prices of essential food commodities to protect low-income households.
Sustainable Policy: Implementing “sustainable policy caution” to ensure that wage growth eventually aligns with or exceeds the cost of living.
Without decisive action to curb the rising cost of goods, the Central Bank warns that the erosion of household savings and purchasing power could undermine the stability of the domestic market and hinder future economic growth.