Following its most severe financial crisis since gaining independence, Sri Lanka has achieved single-digit inflation for the first time in two years.
In July 2023, the Colombo Consumer Price Index, which the Sri Lankan government uses to monitor inflation, recorded a year-over-year rate of 6.3 per cent, down from 12 per cent in June of the same year, as stated by the Census and Statistics Office.
This decline marks the first time Sri Lanka has seen single-digit inflation since September 2021 when it stood at 5.8 per cent. As the country faced its worst economic crisis, the inflation rate skyrocketed to a staggering 69.8 per cent in September 2022.
According to a PTI report, the government statement attributed the lower inflation rate to a decrease in the cost of food commodities. Food prices, based on the index, dropped 1.4 per cent in the past 12 months.
During the currency crisis, Sri Lanka reduced imports, leading to shortages and higher costs. However, after receiving a $2.9 billion bailout from the International Monetary Fund in March of the same year, the government took steps to address the recurring power crisis and lifted import restrictions, resulting in significant improvements to the economy.
Nandalal Weerasinghe, the Governor of the Central Bank, was quoted by PTI as stating that the country is expected to continue recording single-digit inflation in the third quarter of the current financial year as well.
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