Sri Lanka’s nation-wide inflation rises to 6.3-pct in June

ECONOMYNEXT – Sri Lanka’s nation-wide consumer prices rose 6.3 percent in the 2-months to June 2020, rising from 5.2 percent in May, with prices rising 1.4 percent in the month, the state statistics office said.

The food sub-index index spiked 3 percent in the month rising to 143.2 points from 139.0 points a month earlier.

A period of extreme monetary instability was triggered in March and April 2020, with unprecedented money printing and a highly unstable ‘flexible exchange rate’ driving the rupee close to 200 to the US dollar attracting a sovereign downgrade.

Monetary policy has improved in July amid a slowdown in private credit.

The forex shortages that came from the excess money has also triggered the worst import controls since the 1970s, when the Bretton Woods system of soft-pegs collapsed amid a rise in food and oil prices, and Sri Lanka closed the entire economy.

The food index has risen 13.6 percent over the past 12 months. The non-food index had been static for three months in a row. (Colombo/July21/2020)