Sri Lanka’s Inflation Rate Eases To 66% Amid Economic Crisis

After suffering from one of the worst economic crises, prices in Sri Lanka inflation fell somewhat for the first time in a year but were still 66 per cent higher than a year earlier.

The island nation of 22 million people has been experiencing significant economic difficulties for months, with severe shortages of commodities such as food, fuel and medications.

According to figures from the Department of Census and Statistics, October inflation was nearly four percentage points lower than the record 69.8 per cent in September.

Food inflation, which had also reached a 12-month high in September at 94.9 per cent, dropped to 85.6 per cent in October.

Officials said, inflation fell apparently because fuel prices dropped twice in October, each time by 20 per cent.

However, fuel is still twice as expensive as it was before the crisis began late last year, and diesel, which is routinely used for public transportation is three and a half times as expensive.

Sharp price rises for both food and fuel have lowered demand, and queues for petrol, diesel, and cooking gas have shrunk in recent weeks.

The World Bank has predicted that the GDP will drop by 9.2 per cent this year, which is worse than the 8.7 per cent contraction predicted by Sri Lanka's central bank.

In April, an extraordinary slump led the government to default on its USD 51 billion foreign debt and seek a bailout from the International Monetary Fund (IMF).

Months of political turmoil were sparked by blackouts, chronic fuel shortages and high pricing, compelling President Gotabaya Rajapaksa to leave the nation and resign in July.

However, IMF approved USD 2.9 billion bailout package to help the Lankan economy and asked to check on spiralling inflation and address corruption to bring back the economy on track again.