Sri Lanka records first deflation in 39 years

COLOMBO: Cash-strapped Sri Lanka’s economy recorded falling consumer prices for the first time in 39 years, official data showed Monday, with the September inflation figure dipping to negative 0.5 percent.

Census and Statistics Department data showed price drops in both food and non-food goods contributing to deflation in September, compared to inflation of 0.5 percent in August.

Sri Lanka last recorded deflation in October 1985 with a figure of negative 2.1 percent.

Inflation peaked at 69.8 percent two years ago at the height of an unprecedented economic crisis in the island nation.

Acute shortages of food, fuel and medicines led to months of protests that eventually forced then-president Gotabaya Rajapaksa to temporarily flee the country and resign in July 2022.

His successor Ranil Wickremesinghe secured a $2.9 billion International Monetary Fund bailout and raised taxes and prices to stabilise the economy.

Wickremesinghe lost office after a presidential election earlier this month.

The winner of that contest, President Anura Kumara Dissanayake, has vowed to maintain the IMF programme but relax some of the austerity measures it imposed.