Cash-strapped In the middle of the worst economic crisis, Sri Lanka said on Monday that its inflation rate had fallen to 6.3%, a single-digit figure 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% observed in June, according to the statement.
Inflation in the single digits was last observed at 5.8% in September 2021. Since the island nation’s economy entered its worst crisis, the highest inflation rate was 69.8%, which was reported in September of last year.
The message went on to say that lower inflation was a result of the cost of food goods declining. Based on the index, the price of food decreased by 1.4% in absolute terms during the previous 12 months.
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Due to the exceptional currency crisis, Sri Lanka reduced imports, which resulted in shortages and high costs. However, after receiving the $2.9 billion IMF bailout in March of this year, actions to address power shortages and lift import restrictions have significantly helped the situation.
Nandalal Weerasinghe, the governor of the Central Bank, had previously stated that by the third quarter of this year, the country should see single-digit inflation.
Sri Lanka, which declared its first sovereign default ever in April 2022, is negotiating a $2.9 billion bailout with the IMF.
Due to a lack of foreign exchange reserves, the island country experienced its worst economic crisis in history. Restructuring the country’s external debt, which has to be finished by September, is a requirement of the IMF bailout.
