Business & Economy

Inflation shoots up in Sri Lanka due to food shortage, economic crisis

Colombo, Dec 22 (EFE).- Sri Lanka’s inflation rate shot up to 11 percent in November, driven by food shortage and price rise due to the ongoing severe economic crisis in the country, according to the National Consumer Price Index released on Wednesday.

The sharp rise came mainly on the back to inflation in the prices of the food-group products, which jumped to 1″6.9 percent in November from 11.7 percent in October,” the official report said.

According to data released by Sri Lanka’s Central Bank, prices of some vegetables soared five-fold, while the non-food group inflation rose to 6.2 percent compared to 5.4 percent the month before.

The rise in prices comes amid a grave economic crisis in the country, which has witnessed its foreign currency reserves dwindle in the last two years.

This led to the government restricting the import of a number of goods, while urging its citizens abroad to remit foreign currency through registered banks and even to stop importing vehicles.

For months, local markets have rationed food items such as sugar and powdered milk due to the shortage of imported supplies.

The government also announced a fuel price increase on Tuesday with petrol witnessing an increase of about 20 rupees ($1), diesel rising by 10 rupees, and kerosene also by 10 rupees.

The Three-wheeler Association of the country, which operates the traditional tuk-tuk taxi cabs, announced a fare hike of 30 rupees per kilometer.

The increasing fuel and transport costs will further affect the inflation index, because “the latest increase in fuel prices is not reflected in the announced NCPI as the index calculation lags behind real world pricing by about one to two months,” analyst Aruna Kulatunga told EFE.

The commentator said that inflation has also been affected by the government’s decision to print new money.

One of the main reasons behind Sri Lanka’s shortage of foreign currency has been the drastic drop in tourism due to the pandemic, with the island completely closing its borders for months and paralyzing a crucial sector for its economy.

It was only on Oct. 1, that the government began to progressively withdraw its last lockdown, which had been imposed in August to check the spread of the coronavirus, after the island witnessed a fresh wave of infections. EFE


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