COLOMBO: Consumer prices in Sri Lanka fell 2.1 percent in November, the highest rate of deflation recorded by the economically fragile island nation since 1961, according to official data released on Saturday.
An unprecedented financial crash in 2022 led to months of shortages of consumer goods, with inflation peaking at nearly 70% that year.
Since then, a $2.9 billion bailout loan from the International Monetary Fund (IMF), tax hikes and other austerity measures have slowly made progress in rebuilding the island’s economy.
“Headline inflation will remain negative over the coming months, deeper than expected, mainly due to larger downward adjustments in energy prices and reduced volatility in food prices,” he said. the central bank of Sri Lanka said in a statement.
The bank said inflation was expected to return to its target level of 5% in the coming months.
Sri Lanka had already experienced deflation of 0.8% in October and 0.5% in September.
President Anura Kumara Dissanayake, elected in September, has pledged to maintain the IMF bailout package negotiated by his predecessor, which includes higher taxes and reduced state spending.