Since the economic crisis, Sri Lanka has single-digit inflation, according to official data

Cash-strapped In the middle of the greatest economic crisis, Sri Lanka said on Monday that its inflation rate had fallen to 6.3%, a single-digit level for the first time in two years.

The Colombo Consumer Price Index, which the Sri Lankan government uses to monitor inflation, showed a year-over-year rate of 6.3% in July 2023, down from the 12.0% reported in June of this year, according to a statement from the Census and Statistics Office.

 

“In July 2023, the Colombo Consumer Price Index showed an overall inflation rate of 6.3% on a year-over-year basis. This was lower than the 12% seen in June, according to the statement.

 

Inflation in the single digits was last seen at 5.8% in September 2021. Since the island nation’s economy entered its greatest crisis, the highest inflation rate was 69.8%, which was reported in September of last year.

 

The message went on to say that decreased inflation was a result of the cost of food goods declining. Based on the index, the price of food decreased 1.4% in absolute terms during the previous 12 months.

 

Due to the exceptional currency crisis, Sri Lanka reduced imports, which resulted in shortages and high costs.

 

However, after receiving the USD 2.9 billion IMF bailout in March of this year, actions to relieve power shortages and lift import restrictions have significantly improved the situation.

 

Nandalal Weerasinghe, the governor of the Central Bank, had previously said that by the third quarter of this year, the nation should see single-digit inflation.

 

Sri Lanka has negotiating with the IMF for a USD 2.9 billion rescue after announcing its first-ever sovereign default in April 2022.

 

Due to a lack of foreign currency reserves, the island country experienced its worst economic crisis in history.

 

Restructuring the country’s foreign debt, which has to be finished by September, is a requirement of the IMF bailout.