Sri Lanka inflation accelerates to 69.8% in September

Sri Lanka’s inflation accelerated to a fresh record in September amid rising food and fuel costs, but the spike is unlikely to prompt the central bank to resume raising interest rates.

The consumer price index in the capital Colombo rose 69.8% from a year ago, from 64.3% in August, the statistics department said in a statement Friday. A median of four estimates was for a 67% gain in a Bloomberg survey.

Transport costs rose 150.4%, while food prices increased 94.9%, the data showed.

A preliminary agreement with the International Monetary Fund for a $2.9 billion loan and the start of restructuring talks with international creditors are sparking some optimism that the bankrupt South Asian economy is turning a corner. Supplies of food, fuel and medicines have been coming in, slowly easing the severe shortage the nation suffered earlier this year when it ran out of dollars to pay for imports and alongside soaring commodity prices, led to sky-high costs.

The Central Bank of Sri Lanka, which had said it expects inflation to peak in September, is scheduled to announce its policy decision on October 6. It kept the benchmark rate steady at 15.5% last month after a total of 950 basis points hike this year.

© 2022 Bloomberg

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