1 July 2022 09:46 am
Inflation in the Colombo district galloped to an eye-popping 54.6 percent in June 2022 from the same month last year, accelerating from 39.1 percent in May reflecting how fast the Sri Lankan economy is making its people poorer by the day.
The June headline inflation measured by the Colombo Consumer Price Index (CCPI) has been making new record highs since April this year after the country was pushed into hyperinflation since the rupee was let go in March. Since the botched rupee float in March, it has shed more than 80 percent of its value, sending the prices of everything through the roof, shattering the lives of the Sri Lankans who have never experienced what it is like to live in a hyper-inflationary country such as Zimbabwe and Venezuela before.
While Sri Lanka may not have been able to fully escape from the global inflation coming from supply chain disruptions caused by the pandemic, which is exacerbated by the commodities shock coming from Russia’s invasion of Ukraine, Sri Lanka could have well avoided the inflation what it is seeing today had the authorities taken preemptive measures to replenish its dwindling reserves before reaching its breaking point.
Inflation forecasts by the Central Bank made before the war broke out between Russia and Ukraine showed that it wasn’t going to break 15 percent in its worst case during 2022 and 2023.
Besides the shock coming from the exchange rate, the widespread shortages in commodities which were also created by the bad management of the foreign currency reserves are adding to the inflation in Sri Lanka.
Meanwhile, the official food prices surged by a shocking 80.1 percent raising questions how on earth a small family with even two breadwinners could put food on the table as there is no equivalent increase in their salaries.
Instead, compounding the matters, many millions of daily income earners lost their livelihoods due to the fuel shortage which has brought the country into a near standstill from last week. The non-food inflation rose 42.4 percent in the year through June 2022, bulk of which came from the transport subcategory due to the steep rise in fuel prices.