November inflation picks up to 3.4-pct I Sri Lanka Latest News

Sri Lanka’s 12-month inflation in the capital Colombo rose to 3.4 per cent in November 2023, from 1.5 per cent in October, the state statistics office said.

The widely watched Colombo Consumer Price Index grew 1 per cent in the month to 193.4 points with the electricity and housing sub-index growing 4.0 per cent following an electricity tariff hike.

The food index grew 0.3 points to 230.3 but the 12-month change was down 3.6 percent.

The Colombo Consumer Price Index has grown only 2.1 per cent since monetary stability was reached in September 2022, posting a balance of payments surplus and the rupee was allowed to appreciate in March amid deflationary open market operations.

Sri Lanka has since cut rates several times.

Analysts have warned that any rate cuts enforced with inflationary open market operations or reserve collections beyond the sell-downs of central bank securities (deflationary policy) will lead to a weakening exchange rate.

Monetary debasement which triggers higher food and energy prices leads to the ouster of reformist governments or missed reserve targets. Foreign reserve collection is similar to debt repayment of financing the deficit of a reserve currency country. 

Source : Economynext

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