Photo : Collected
Sri Lanka's statistics office on Friday said the key inflation rate fell to 0.9 per cent year-on-year in March from 5.9% in February, the lowest since the country sank into an unprecedented economic crisis.
The island nation defaulted on its $46 billion foreign debt in April 2022 after a foreign exchange wipeout left it unable to import food, fuel, and other essentials.
This month's inflation reading, from the benchmark Colombo Consumer Price Index, is a huge drop from the peak of nearly 70 per cent in September of that year.
The central bank in Sri Lanka this week cut its benchmark lending rate from 10 per cent to 9.5 per cent – the first reduction in four months – in a measure it said would boost the ongoing revival of economic activity.
Months of protests during the economic crisis led to the ouster of then-president Gotabaya Rajapaksa when demonstrators stormed his residence.
His successor Ranil Wickremesinghe has sharply raised taxes, cut energy subsidies, and secured a $2.9 billion rescue package from the International Monetary Fund (IMF).
Both Wickremesinghe and the IMF said the South Asian nation was gradually emerging from the crisis following the austerity measures.
Inflation is likely to remain in line with the 5 per cent target for the next 12-18 months, Sri Lanka's central bank said this week after reducing policy rates by 50bps.
In total, the central bank of Sri Lanka has reduced policy rates by 700bps since last year to help the island nation's economy return to growth.
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