According to the statistics department, Sri Lanka’s National Consumer Price Index (NCPI) increased to a new high of 73.7 percent from a year earlier in September, up from 70.2 percent in August.
Annual food price inflation increased to 85.8 percent in September, up from 84.6 percent in August, while non-food prices increased 62.8 percent.
Nandalal Weerasinghe, Governor of Sri Lanka’s Central Bank, predicted earlier on Thursday that inflation in the island nation has peaked, with price rises expected to slow this month.
The NCPI measures broader retail price inflation and is released every month with a 21-day lag.
The Colombo Consumer Price Index (CCPI), which is released at the end of each month, rose 69.8 percent in August.
It serves as a leading indicator for national prices and depicts the evolution of inflation in Sri Lanka’s largest city.
However, analysts told Reporters that higher-than-expected inflation figures are unlikely to prompt the central bank to raise interest rates next month.
“Tariff increases for power and water implemented in August has spilled over into September along with a tax hike for telecommunications,” said Dimantha Mathew, head of research for Colombo-based investment firm First Capital, giving reasons for the inflation spike.
“However, the central bank is unlikely to increase rates as the economy is cooling down and we expect to see the pace of inflation slowing down from October.”
Sri Lanka plans to raise direct taxes in order to reduce the deficit in its upcoming budget for 2023 and put the economy on a more stable footing, according to President Ranil Wickremesinghe.
Due to economic mismanagement and the impact of the COVID-19 pandemic, Sri Lanka is struggling to pay for essential imports such as food, fuel, fertilizer, and medicine.
The country reached a preliminary agreement with the International Monetary Fund in September for a loan of approximately $2.9 billion, contingent on receiving financing assurances from official creditors and negotiating with private creditors.
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