Sri Lanka inflation hits 38-month high of 8%

Sri Lanka's inflation reached a 38-month high of 8.0 percent in August as prices for food and other essentials rose, the government's statistics office said Monday.

The annual rate was 7.3 percent the previous month and 1.2 percent a year earlier, according to the Department of Census and Statistics.

The department said the increase was mainly driven by transport, housing, water, electricity, gas and other fuels.

Sri Lanka has raised fuel prices by about half since global energy prices rose during the Middle East war. The import-dependent country has warned that prolonged conflict in the region could threaten its recovery from the 2022 economic crisis.

The International Monetary Fund approved a $2.9 billion bailout for Colombo in March 2023. Under IMF-backed reforms, Sri Lanka must ensure cost recovery in fuel and electricity pricing while limiting subsidies that strain public finances.

Sri Lanka defaulted on its $46 billion foreign debt in 2022 and has been drawing down the IMF loan since then to stabilise the country.