Daily Times

Cash-strapped Sri Lanka´s inflation fell to 6.3% in July in nearly two years after swelling to nearly 70% last year, official figures showed on Monday.

“The overall rate of inflation as measured by the Colombo Consumer Price Index on a year-on-year basis is 6.3 per cent in July 2023. This was down from the 12 per cent recorded in June,” the Census and Statistics Office of the Sri Lankan government said in a statement.

The island country witnessed the worst-ever economic crisis including widespread shortages of fuel and countrywide blackouts and the ouster of its president, with inflation peaking at 69.8% last September.

But it has fallen since then, reaching 12.0% in June before dropping further in July, when data from the department of Census and Statistics showed a decline in food prices, reported AFP.

Sri Lanka defaulted on its $46 billion foreign debt in April 2022 and many of its 22 million people endured months of food, fuel and medicine shortages.

The foreign exchange shortage has somewhat eased since, with the government securing a $2.9 billion bailout from the International Monetary Fund in March.

Last month, the government unveiled a debt restructuring plan which offered a 30% haircut for international sovereign bondholders, who account for more than a quarter of Sri Lanka´s outstanding foreign obligations.

The IMF said last month that Sri Lanka´s economy showed “tentative signs of improvement” but warned Colombo still needed to pursue painful reforms.

Last year´s economic crisis sparked months of civil unrest which eventually toppled then-president Gotabaya Rajapaksa.

His successor Ranil Wickremesinghe has doubled taxes, removed generous subsidies on energy and sharply raised prices to shore up state revenue.