Sri Lanka Records Highest Deflation Since 1961 as Consumer Prices Drop 2.1% in November
COLOMBO: Sri Lanka has recorded a significant milestone in its economic recovery, with consumer prices falling by 2.1% in November—the highest deflation rate since 1961, according to official data released on Saturday.
The island nation, which faced an unprecedented financial crisis in 2022, saw inflation skyrocket to nearly 70% last year amid severe shortages of essential goods. However, the implementation of a $2.9 billion International Monetary Fund (IMF) bailout, coupled with austerity measures such as tax hikes and reductions in public spending, has gradually stabilized the economy.
In a statement, the Central Bank of Sri Lanka projected that headline inflation would remain in negative territory for the coming months. The decline is attributed to substantial reductions in energy prices and volatile food costs. The bank further expressed optimism, stating that inflation is expected to stabilize around its target level of 5% in the near future.
November’s deflation follows decreases in previous months, with consumer prices dropping by 0.8% in October and 0.5% in September.
President Anura Kumara Dissanayake, who assumed office in September, has reaffirmed his commitment to continuing the IMF bailout programme negotiated by his predecessor. The programme includes stringent measures such as higher taxes and cuts to government spending, aimed at ensuring long-term economic stability.
Sri Lanka’s gradual recovery from its financial collapse marks a critical turning point, offering hope for a more sustainable and resilient economic future.
