ECONOMYNEXT – Sri Lanka’s inflation in the capital Colombo had risen to 6.0 percent in August 2021, from 5.7 percent in July with prices rising 0.3 percent in the month, data from the state statistics office shows.
The widely watched Colombo Consumer Price Index rose to 143.5 points in August from 143.1 in July with food prices rising 0.7 percent.
The food sub-index had risen 11.5 percent during the past 12-months.
Sri Lanka’s central bank has been printing large volumes of money over the past 18 months, losing forex reserves and weakening the currency.
The rupee has fallen to around 220 to the US dollar for importers and exporters.
When the currency falls due to money printing, the prices of exported products like tea and also imported products like milk go up.
Sri Lanka is showing lower levels of inflation than in the 1980s by lowering the food component in the index and increasing non-traded items like telecoms, which tend to delay the response of the index to monetary instability.
Meanwhile global commodity prices are also rising due to Federal Reserve money printing or the so-called Powell bubble. (Colombo/Sept01/2021)