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Saturday October 1st, 2022

Sri Lanka inflation tops 60-pct in July 2022 after money printing

ECONOMYNEXT – Sri Lanka inflation in the 12-months to July 2022 accelerated to 60.8 percent in the wake of failed float of the currency after two year of money printing, official data showed.

The widely watched Colombo Consumer Price Index rose to 4.5 percent during the month, after climbing 12.8 percent in June.

The food index 90.9 percent over 12 months.

Sri Lanka printed money for two years in monetary and fiscal stimulus to close an output gap in the third currency crisis since 2015.

In March an attempt was made to float the currency (suspend convertibility) ironically with a surrender rule leading to the peg collapsing from 200 to 360 to the US dollar.

Policy rates have since been hike to 15 percent to smash private credit and drive more money to the deficit in a bid to restore the lost credibility of the peg.

The central bank has said inflation may peak at 75 percent. (Colombo/July29/2022)

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