Skyrocketing inflation in Sri Lanka amid severe economic crisis; Food prices at record high

Colombo, Jan 22 (PTI) Sri Lanka’s core inflation rate, as measured by the National Consumer Price Index, accelerated to 14% in December 2021 from 11.1%, it was reported on Saturday. the government statistics office, in the midst of a severe currency crisis. crisis.

It was the second month in a row after inflation recorded double-digit growth for the first time in November since the index was compiled from 2014.

Food prices jumped 6.3% while prices for non-food items rose 1.3% in December, according to the National Consumer Price Index.

“The food sub-index increased by 21.5% in the 12 months to December 2021, while non-food products also increased by 7.6% in the months,” the statistics office said in a statement. communicated.

As soon as the COVID-19 pandemic broke out in 2020, the government imposed import restrictions in an attempt to stop the decline in foreign exchange reserves.

Sri Lanka is currently relying on Indian economic aid with lines of credit made available to fund fuel and food imports.

The island nation is currently facing a severe currency crisis with declining reserves.

The country is struggling with a shortage of almost all basic necessities due to the lack of dollars to pay for imports.

In addition, power cuts are imposed during peak hours, as the public entity is unable to obtain fuel to run the turbines.

The public entity in charge of fuels has interrupted the supply of oil because the electricity company has large unpaid bills. The only refinery was recently closed because it was unable to pay for crude oil imports in dollars.

Earlier this month, the Indian government announced a $1 billion aid package in addition to other balance of payments support for Sri Lanka.

The billion dollar credit facility is to be used to avert a food crisis while allowing the importation of items and medicine. In addition, US$500 million will be earmarked for importing fuel from India.

The Sri Lankan government is also in talks with China to overcome the current financial crisis. During Chinese Foreign Minister Wang Yi’s visit to Colombo earlier this month, President Gotabaya Rajapaksa asked for Beijing’s help in mitigating the deepening foreign exchange crisis and soaring foreign debt of his country, saying it would help Colombo to the best of his abilities.

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