Colombo (awp/afp) – Sri Lanka, in the grip of a historic economic crisis, experienced the first drop in 12 months in its inflation rate in October, but prices remained 66% higher than a year earlier, according to official data released on Monday.
October’s inflation rate fell nearly four percentage points from its record high of 69.8% in September, according to data from the Census and Statistics Department.
Food inflation, which also hit a record high for the 12th consecutive month in September at 94.9%, fell to 85.6% in October.
The ministry did not give reasons for the slowdown in inflation, but the authorities cut fuel prices by 20% in October.
However, gasoline is still twice as expensive as it was before the crisis began at the end of 2021, while diesel, used in public transport, is still three and a half times more expensive.
The country of 22 million people is ravaged by a historic economic crisis, marked by severe shortages of food, medicine, fuel and power outages.
The sharp rise in food and fuel prices has led to a drop in demand and queues for petrol, diesel and cooking gas have narrowed sharply in recent weeks.
The World Bank has warned that the island’s economy could contract by 9.2% this year, much worse than the 8.7% predicted by the Central Bank of Sri Lanka.
High prices and shortages sparked months of political unrest against then-president Gotabaya Rajapaksa, who was forced to flee the country and resign in July.
The South Asian country defaulted on its $51 billion foreign debt in mid-April.
The IMF has approved a four-year, $2.9 billion bailout to help Sri Lanka clean up its finances, subject to an agreement with its creditors, including China.
The institution also asked the government to contain inflation as much as possible and tackle corruption to revive the country’s economy.
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