Sri Lanka’s inflation spikes to 70.2%

Sri Lanka recorded 70.2 per cent inflation rate for August 2022.

Key facts

  • Sri Lanka’s inflation has increased to 70.2 per cent in August. In July, the country recorded 66.7 per cent.
  • The National Consumer Price Index (NCPI) has increased 2.5 per cent in August, as the food prices increased 1.7 per cent and prices of non-food products increased 3.2 per cent.
  • The non-food inflation increased to 57.1 per cent in August from 52.4 per cent in July. This mainly because of the increase in electricity tariffs.
  • However, the monthly prices have decreased to 3.2 per cent from the July’s 6.7 per cent.
  • Core prices, without including volatile items like food, energy and transport, have surged from 57.3 per cent in July to 60.5 per cent in August.
  • Prices of food items have spiked by 84.6 per cent, an increase from July’s 82.5 percent.
  • However, changes in the prices measured in monthly basis has declined from 4.6 per cent in July to 1.7 per cent.
  • It is forecasted that, if the global commodities prices remain stable, inflation in Sri Lanka will reach the highest in September before easing thereafter.

Economic situation in Sri Lanka

In mid-April this year, Sri Lanka declared its international debt default because of the foreign exchange crisis. The country currently owes 51 billion USD in foreign debt, of which USD 28 billion must be paid by 2027. Sri Lanka is among top five countries having the highest food price inflation. It is behind Zimbabwe, Venezuela and Turkey. Sri Lanka’s 22 million people are facing shortages of essential goods like food and medicines after forex dropped to record lows and halted imports. Its economy has contracted by 8.4 per cent in the three months to the end of August. The current economic crisis in the country is attributed to financial mismanagement and adverse impact of COVID-19 on tourism sector.

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