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Sunday June 26th, 2022

Sri Lanka national inflation gallops to 16.8-pct in Jan 22

ECONOMYNEXT – Sri Lanka’s nation-wide inflation galloped to 16.8 percent in the 12-months to January 2022 from 14.0 percent in December 2021, data from the state statistics office showed, in the wake of remarkable money printing in the country.

The National Consumer Price Index jumped 3.1 percent in during the month of January, after rising 3.7 percent in December and 3.1 percent in November.

Sri Lanka started printing money at a high pace from around February 2020 to create a ‘production economy’ after cutting taxes in December 2019 which de-stabilized state finances.

Sri Lanka’s reserve money grew 40 percent in the year to December 2021 and there was a record balance of payments deficit as the new money ripped the balance of payments apart.

Meanwhile broad money, measured by M2b also grew 40 percent in the two years.

While newly printed money creates forex shortages in the space of a few weeks, domestic inflation appears a year to two later as pyramiding credit drives up broad money. (Colombo/Feb21/2022)

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