Almost half of the Sri Lankan population has been forced to live under the poverty line, but Sri Lanka Central Bank Governor, Nandalal Weerasinghe has reassured the public that he expects inflation to ease and claimed that inflation peaked in September, hitting over 70%.
According to the Sri Lankan government’s statistics department, the inflation rate has accelerated to 73.7% in September, up from 70.2% in August. Across this period, annual food price inflation increased from 84.6% to 85.8%. The Food and Agriculture Organization of the United Nations (FAO) and the United Nations World Food Programme (WFP) has warned that 30 percent of the population in Sri Lanka is “experiencing acute food insecurity”.
Al Jazeera reports that the "higher-than-expected inflation numbers are unlikely to push the central bank to increase rates next month". Explaining the spike in inflation, Dimantha Mathew, head of research for Colombo-based investment firm First Capital, stated:
“Tariff increases for power and water implemented in August has spilled over into September along with a tax hike for telecommunications”.
He adds that:
“However, the central bank is unlikely to increase rates as the economy is cooling down and we expect to see the pace of inflation slowing down from October.”
Despite the confidence of Weerasinghe, opposition MPs have warned that the sweeping reforms of the government may bring about social unrest and fail to tackle the corruption of Sri Lanka's elite.
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