In the throes of a historic economic crisis, Sri Lanka experienced its first decline in its inflation rate in 12 months. Prices, however, remain 66% higher than the previous year, according to official data released on Monday.
The October inflation rate fell nearly four percentage points from its record high of 69.8% in September, according to data from the Census and Statistics Department.
Food inflation, which also hit a record for the 12th consecutive month in September at 94.9%, dropped to 85.6% in October.
The ministry did not explain the slowdown in inflation, but the authorities cut fuel prices by 20% in October.
A country devastated by serious shortages
However, gasoline still costs twice as much as it did before the crisis began at the end of 2021, while diesel, used in public transport, is still three and a half times more expensive.
The country of 22 million people is ravaged by a historic economic crisis, marked by severe shortages of food, medicine, fuel and power outages.
The sharp rise in food and fuel prices has led to a drop in demand and queues for gasoline, diesel and cooking gas have dropped dramatically in recent weeks.
The World Bank has warned that the island’s economy could contract by 9.2% this year, much worse than the 8.7% forecast by the Central Bank of Sri Lanka.
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$ 2.9 billion bailout
High prices and shortages sparked months of political unrest against then-president Gotabaya Rajapaksa, who was forced to leave the country and resign in July.
The South Asian country defaulted on its $ 51 billion foreign debt in mid-April.
The IMF has approved a four-year $ 2.9 billion bailout to help Sri Lanka clean up its finances, in agreement with its creditors, including China.
The institution also asked the government to contain inflation as much as possible and to fight corruption in order to relaunch the country’s economy.
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