Sri Lanka: Inflation rate jumps to 70.2% in August

Sri Lanka is enduring its worst economic crisis in over seven decades, as August saw the country’s annual inflation rate surge to more than 70%. 

Official data shows food prices rose by 84.6% compared to a year ago. The nation of 22 million people fell into financial and political chaos this year as it faced a shortage of foreign currencies. 

The country has been unable to buy key imports – such as fuel, fertiliser and medicine. 

Last month, the Central Bank of Sri Lanka said it expected inflation to ease as the county’s economy slowed, after peaking at about 70 per cent. 

Figures released last week showed that the economy had contracted by 8.4 per cent in the three months to the end of August. 

Before the Covid pandemic, Sri Lanka was reliant on tourism for foreign currencies, including the US dollar. 

But border closures and other Covid measures kept tourists away and severely damaged the economy. 

The pandemic, along with years of financial mismanagement, led to the country defaulting on its debts earlier this year. 

Sri Lanka has faced political instability in recent months, with the country’s president fleeing abroad before resigning in July. 

Hundreds of thousands of people have protested over food and fuel prices, with many blaming the government for mishandling the crisis.