Sri Lanka’s inflation slowed in December for a third straight month as tight monetary policy crimped demand and supply conditions normalized.
(Bloomberg) — Sri Lanka’s inflation slowed in December for a third straight month as tight monetary policy crimped demand and supply conditions normalized.
The consumer price index in the capital Colombo eased to 57.2% from a year ago, the statistics department said in a statement released Friday. That compares with 61% in November and a median of 56.6% in a Bloomberg survey.
Moderating global commodity and food prices eased price pressures. Transport costs rose 132.1% from a year go, while food prices rose 64.4%, the data showed
Cooling prices support the Central Bank of Sri Lanka’s disinflation expectations and gives the monetary authority more room to help turnaround the economy that is weathering its worst economic meltdown in decades. It has raised borrowing costs by 9.5 percentage points to 15.5% so far this year.
The central bank last month forecast inflation would slow to 4%-5% by the end of 2023 after peaking near 70% this year.
Sri Lanka has fulfilled most preconditions for a $2.9 billion International Monetary Fund bailout and is currently focused on bilateral debt restructuring in order to secure board approval for the program.
–With assistance from Tomoko Sato.
(Updates with chart and more details in third paragraph.)
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