Sri Lanka inflation hit 70.2 percent in August

- Advertisement -



Food prices rose 84.6 percent in the beleaguered island nation, while prices for non-food items rose 57.1 percent.

Consumer inflation in Sri Lanka rose to 70.2 percent in August, the statistics department has said, as the island nation grapples with its worst economic crisis in decades.

- Advertisement -

The National Consumer Price Index (NCPI) rose 70.2 percent last month compared to a year ago, after a 66.7 percent increase in July, the Census and Statistics Department said in a statement on Wednesday.

In the South Asian country with a population of 22 million people dependent on tourism, food prices increased by 84.6 per cent, while non-food prices increased by 57.1 per cent.

advertisement

The Central Bank of Sri Lanka (CBSL) said in August that inflation would moderate after peaking at around 70 per cent as the country’s economy slowed.

The NCPI captures broad retail price inflation and is released every month with an interval of 21 days.

- Advertisement -

The more closely monitored Colombo Consumer Price Index (CCPI), released at the end of each month, rose 64.3 percent in August. It serves as a leading indicator for national prices and shows how inflation is developing in the largest city of Sri Lanka.

Sri Lanka’s economy shrank 8.4 percent in the quarter from June a year ago, in one of the biggest declines seen in a three-month period, amid shortages of fertilizer and fuel.

“Inflation is expected to moderate from September,” said Dimantha Mathew, head of research at Colombo-based investment firm First Capital. “However, inflation is only moderate and likely to reach single digits in the second half of 2023.”

Economic mismanagement and an acute shortage of the dollar due to the effects of the COVID-19 pandemic have left Sri Lanka struggling to pay for essential imports including food, fuel, fertilizers and medicine.

Earlier this month the country inked a preliminary agreement with the International Monetary Fund for a loan of about $2.9 billion, dependent on obtaining financial assurances from official creditors and negotiations with private creditors.

India begins debt-restructuring talks

India on Tuesday said it has started talks with Sri Lanka on restructuring its debt and pledged to support the troubled neighbor mainly through long-term investments, after providing financial assistance of around $4 billion.

The Indian High Commission in Colombo said it held the first round of loan talks with Sri Lankan officials on 16 September.

“The discussions held in a cordial atmosphere symbolize India’s support for the early conclusion and approval of a suitable IMF program for Sri Lanka,” the High Commission said.

Sri Lanka will make a presentation to its international creditors on Friday, detailing the full extent of its economic troubles and debt restructuring plans.

The Indian High Commission also said that New Delhi would continue to support Colombo “in all possible ways, especially by promoting long-term investments from India in key economic sectors”.

India’s support to Sri Lanka this year includes a $400m currency exchange, a $1bn credit line for essential goods and a $500m line for fuel. In addition, India has also deferred payments of about $1.2 billion on Sri Lankan imports and a $55 million line of credit for fertilizer imports.

India has continued development projects worth about $3.5 billion in Sri Lanka, the High Commission said, whose president earlier this month asked its officials to resolve bottlenecks in projects supported by India. He did not specify constraints or projects.

President Ranil Wickremesinghe has said that Sri Lanka will convert the free trade agreement with India into a comprehensive economic and technical partnership.

Credit: www.aljazeera.com /

- Advertisement -

Recent Articles

Related Stories