Inflation in Sri Lanka spikes to 21.5% in March 2022 amid economic crisis
Inflation in debt-ridden Sri Lanka soared to 21.5%, official data showed on Friday, even as Finance Minister Ali Sabry met with IMF officials in Washington to negotiate a bailout package for the country.
Sri Lanka’s nationwide inflation for March 2022 according to the National Consumer Price Index (NCPI) jumped to 21.5% from 17.5% in February 2022, the Census Department reported. and statistics.
As a result, food inflation also increased from 24.7% last month to 29.5% in March. Similarly, the moving average inflation for March 2022 stood at 10.6% against 9.3% the previous month. Food prices have increased by 29.5% over the past 12 months.
According to the Census and Statistics Department statement, the high level of inflation has affected the prices of most essential food items such as rice, sugar, milk and bread. Sri Lanka’s economic crisis is caused in part by a lack of foreign exchange, which means the country cannot afford to pay for imports of basic foods and fuel, leading to acute shortages and price very high.
Soaring inflation rates are another grim reminder of Sri Lanka’s growing economic woes that have sparked nationwide protests calling for the removal of President Gotabaya Rajapaksa.
Finance Minister Sabry has held talks with the International Monetary Fund (IMF) in Washington to secure $4 billion in aid.
Last month, Sri Lanka’s central bank devalued the rupee by up to 15% to qualify for the IMF loan.
Last week, the Sri Lankan government said it would temporarily default on $35.5 billion in external debt as the pandemic and war in Ukraine made payments to foreign creditors impossible. On Monday, Sri Lanka’s finance ministry confirmed it would miss $78 million in interest payments on international sovereign bonds.
Meanwhile, India on Friday extended the term of the $400 million currency swap facility that was agreed with the island nation in January.
It was the first extension of an international debt instrument in Sri Lanka after the government led by President Gotabaya Rajapaksa temporarily suspended debt servicing on April 12.
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