Sri Lanka’s key inflation fee eases to 66% in October

Sri Lanka’s key inflation fee eased to 66% in October after hitting 69.8% in September, the crisis-struck nation’s statistics division stated on Monday.

The nonetheless extraordinarily elevated Colombo Consumer Price Index (CCPI) mirrored a 85.6% leap in meals costs in October and a 56.3% climb within the non-food group, the Census and Statistics Department stated in an announcement.

However, the tempo of meals inflation slowed from a all-time excessive of 94.9% in September.

Sri Lanka has been fighting hovering inflation for practically a yr, partly triggered by its worst monetary disaster in seven many years and a ill-thought out ban on chemical fertiliser applied final yr, which has since been reversed.

“We are finally seeing a drop in inflation and expect this to continue over the next few months. However, inflation is only likely to hit single digits after the second quarter of next year,” stated Dimantha Mathew, head of analysis at First Capital Holdings.

The CCPI, launched on the finish of every month and intently watched by central financial institution policymakers, acts as a lead indicator for broader nationwide costs and exhibits how inflation is evolving in Colombo, Sri Lanka’s greatest metropolis.

Sri Lanka’s different essential inflation measure, the National Consumer Price Index (NCPI), which captures broader retail value inflation, additionally touched a report 73.7% in September.

In an effort to tame costs and stabilise markets, the Central Bank of Sri Lanka (CBSL) has raised rates of interest by 900 foundation factors to date this yr. Its remaining coverage announcement for the yr will likely be within the final week of November.

Sustained excessive inflation would make it tough for the federal government to introduce recent oblique taxes in its upcoming funds for subsequent yr that will likely be offered to parliament on Nov. 14, analysts stated.

Higher taxes are important to spice up public income to anchor fiscal consolidation and lock down a $2.9 billion bailout programme with the International Monetary Fund (IMF).