Sri lanka News – Sri Lanka’s nation-wide inflation galloped 66.7 percent in the 12 – months to July 2022, the state statistics office said, amid the worst currency triggered by the islands intermediate regime central bank.
The National Consumer Price Index climbed to 244.4 points from 231.5 points rising 5.6 percent in the month of July.
In the 12 months to July food prices are up 82.5 percent.
Sri Lanka food prices are up 102.44 percent since February 2020 when extreme money printing began to target a ‘persistent output gap’ under ‘flexible’ inflation targeting.
However food prices are up 128.6 percent since August 2019 when inflationary policy began under output gap targeting with outright purchases of bonds in yield curve targeting under output gap targeting and Sri Lanka lost the ability to collect reserves.
Sri Lanka has a reserves collecting soft-peg but under ‘flexible’ inflation targeting it was bombarded with liquidity injection until in collapsed repeatedly and eventually the country ended up in default.
The central bank in April allowed interest rates to go up and private credit has collapsed and inflation especially from traded goods and food is starting to ease. However services prices tend to go up for a longer period. (Colombo/Aug22/2022)