Sri Lanka inflation quickens for third month as economy rebounds

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Sri Lanka’s inflation climbed in December for a third straight month as a rebound in economic activity boosted consumption.

The consumer price index in Colombo rose 4 percent from a year ago, the statistics department said on Friday (Dec 29). That’s faster than a 3.7 percent gain seen in a Bloomberg survey, and compared with 3.4 percent in November. 

The numbers are in line with expectations of the Central Bank of Sri Lanka, which last month signaled a pause after cutting interest rates for a fourth time this year to support the nation’s recovery from an unprecedented crisis. Sri Lanka’s economy expanded for the first time in nearly two years in the July-September quarter, underscoring a turnaround stemming from a US$3 billion International Monetary Fund bailout.

The Washington-based lender earlier this month gave final approval for a US$337 million loan payout that will help build risk buffers ahead of national elections due next year. 

Sri Lanka is in the process of restructuring its debt after defaulting last year for the first time in its history. Authorities are in talks with dollar bondholders after sealing agreements with the South Asian nation’s official creditors. 

(Source: Bloomberg)

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