Low on funds According to official figures released on Monday, Sri Lanka’s economy saw declining consumer prices for the first time in 39 years, with the country’s September inflation rate falling to a negative 0.5%.
According to data from the Census and Statistics Department, price reductions for both food and non-food items contributed to September’s deflation as opposed to August’s 0.5 percent inflation.
The last month Sri Lanka had deflation was October 1985, when the country’s GDP shrank by 2.1 percent.
Two years ago, at the height of the island nation’s extraordinary economic crisis, inflation reached a peak of 69.8 percent.
Severe food, fuel, and medication shortages sparked months of unrest, which ultimately resulted in the temporary departure of then-President Gotabaya Rajapaksa and his resignation in July 2022.
In order to stabilize the economy, his successor Ranil Wickremesinghe increased taxes and prices and obtained a $2.9 billion bailout from the International Monetary Fund.
Following this month’s presidential election, Wickremesinghe was ousted from power.
President Anura Kumara Dissanayake, who won that competition, has promised to keep the IMF program in place but loosen some of the strict austerity requirements it imposed.
