Sri Lanka inflation lower amid warnings of shrinking growth
INFLATION in Sri Lanka dipped marginally for the first time in 12 months, but prices were still an eye-watering 66 percent higher than a year ago, official data showed on Monday (31).
The island nation of 22 million people has suffered months of extreme economic hardship with severe shortages of essentials including food, fuel and medicines.
The Department of Census and Statistics data showed inflation in October was nearly four percentage points lower than the record 69.8 per cent in the previous month.
Food inflation, which had also reached a record high for the 12th consecutive month in September at 94.9 percent, moderated to 85.6 percent in October.
The department did not give reasons for the slowdown in inflation, but authorities had reduced fuel prices twice in October, cutting prices by 20 per cent.
However, the price of petrol is still double the amount before the start of the crisis late last year, while diesel – used commonly for public transport – is still three and-a-half times more.
The World Bank has warned the economy could shrink by 9.2 per cent this year, worse than the 8.7 per cent contraction the central bank of Sri Lanka had forecasted. An unprecedented downturn forced the government to default on its $51 billion (£44.4bn) foreign debt in April and go to the International Monetary Fund (IMF) for a bailout.
Blackouts, chronic fuel shortages and high prices triggered months of political unrest, ultimately forcing the president Gotabaya Rajapaksa to flee the country and resign in July.
The IMF has tentatively approved a four-year, $2.9bn (£2.5bn) bailout in order to help the country reorganise its finances, subject to an agreement with its creditors.