Sri Lanka's Central Bank has admitted that inflationary pressures are being felt after July figures nearly touched double digits for the first time in over three years but insists that it can be controlled, a statement said Tuesday.

Inflation has picked up with year-on-year inflation, the Central Bank said, increasing to 9.8 percent in July 2012, from 9. 3 percent in the previous month, although annual average inflation has continued to remain at around 6 percent since February 2012.

The Central Bank has attributed the change to the drought situation in the country, which is affecting thousands of farmers and crucial paddy cultivation. "Although there could be some transitory inflationary pressures in the near term, the expected improvements in domestic supply conditions as well as tax reduction on imports are expected to contain consumer price inflation at single digit levels during the remainder of the year,"the statement said.

Earlier, the International Monetary Fund (IMF) remarked that they expect inflation to hit 10 percent or more this year.

However, the Central Bank has stressed that tight monetary policy would help keep inflation low in the medium term.