ECONOMYNEXT – Sri Lanka’s inflation in June 2023 slowed to 12 percent from 25.2 percent in May 2023 data from the state statistics office showed as the central bank operated deflationary monetary policy.
Sri Lanka’s Colombo Consumer Price Index was unchanged at 192.3 point in June from a month earlier.
The index was down from 195.0 points in March 2023 when the rupee started to appreciate after a surrender rule was lifted amid deflationary policy.
Sri Lanka’s central bank reached monetary stability around September 2022 and started to run balance of payments surpluses with deflationary policy after running out of Asian Clearing Union deferred funds.
Since September 2022, to June the revised Colombo Consumer Price Index grew only 1.5 percent amid deflationary policy.
Sri Lanka interest rates are also starting to fall.
A flexible policy central bank money can collapse in the second year on an International Monetary Fund when credit recovers and attempts are made to collect reserves without allowing short term rates to move, analysts have warned.
Countries that go the IMF frequently have the worst central banks in the world and have social and political unrest as well as sovereign default. (Colombo/June30/2023)