Sri Lanka Inflation Accelerates to Fastest on Record in February
Sri Lanka’s inflation accelerated at a faster-than-expected pace in February on higher food, fuel prices, adding to its FX crisis.
(Bloomberg) -- Sri Lanka’s headline inflation accelerated at a faster-than-estimated pace in February on higher food and fuel prices, adding to the woes of an economy hamstrung by a foreign exchange crisis.
Official data Monday showed consumer prices in the capital Colombo rose 15.1% this month from a year earlier, faster than the median estimate for a 14.6% gain in a Bloomberg survey of economists. The monthly number was the fastest on record under the new series used since 2015, while the average annual inflation rate rose 7.9%.
Quickening prices could force the central bank to raise borrowing costs to near pre-pandemic levels as the monetary authority seeks to check Asia’s fastest inflation. Failed harvests and rising demand for imports of everything from food to fuel is pressuring the nation’s fast-depleting foreign exchange reserves amid waning remittance inflows and a hit to tourism from the pandemic.
While the nation has so far relied on bilateral loans, including from China and India, to fend off a default, the deepening conflict in Ukraine is boosting the case for seeking a bailout from the International Monetary Fund -- a recourse the island nation has shunned given the funds comes with strict fiscal and monetary conditions.
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