Sri Lanka inflation down for second month in November at 61%

Falling global commodity prices, assistance from friendly countries and repurposed funds from multilateral lenders have helped Sri Lanka stay afloat and ease paralyzing shortages.

Sri Lanka’s inflation slowed in November for a second straight month amid improved supply conditions and tight monetary policy.

The government is working to secure International Monetary Fund board consent for a $2.9 billion bailout program. (Representational image/ Bloomberg)

The consumer price index in the capital Colombo eased to 61% from a year ago, the statistics department said in a statement released Wednesday. That compares with 66% in October and a median of 62% in a Bloomberg survey of three economists.

The decline mirrors expectations that consumer prices will cool in the coming months after inflation peaked near 70%. The Central Bank of Sri Lanka has raised borrowing costs by 950 basis points this year, taking the key rate to 15.5% to tame prices and rein in demand.

On Nov. 24, the monetary authority said there’s a need to stay hawkish, even as it held the benchmark interest rate steady for a third straight meeting to stabilize an economy hit by recession.

Falling global commodity prices, assistance from friendly countries and repurposed funds from multilateral lenders have helped Sri Lanka stay afloat and ease paralyzing shortages.

The government is working to secure International Monetary Fund board consent for a $2.9 billion bailout program and is currently in discussions with bilateral creditors to restructure the South Asian island’s debt.