The economy of Sri Lanka was confirmed to be in a state of deflation for the first time in 39 years. The inflation rate recorded minus 0.5% in September, according to the Census and Statistics Department. The country has witnessed a tremendous shift from the inflation rate of 0.5% recorded in August.
The decrease in consumer prices is down due to both food and non-food products, a manifestation of the still-struggling economy. The last recorded deflation was recorded in October 1985 at -2.1%.
This year, the country saw a peak inflation rate of 69.8 percent two years ago due to an acute shortage of staple goods such as food, fuel, and medicines at the height of an economic crisis that forced then-President Gotabaya Rajapaksa to step down in July after fleeing the country.
His successor, Ranil Wickremesinghe, managed to seal a bailout of $2.9 billion from the IMF and implement austerity measures that include tax increase and price rises to stabilize the economy after these riots. Meanwhile, Wickremesinghe lost his position in the latest presidential election.
The new President Anura Kumara Dissanayake promised to stand by the IMF program despite rolling back some austerity measures that the previous administration enforced. This is a move that will indeed make things a little easier on citizens’ pockets while finding their way through the hard road ahead towards recovery of the Sri Lankan economy.
