Money-strapped Sri Lanka on Monday stated that its inflation dropped to six.3 per cent in July from 12 per cent in June, a single-digit determine for the primary time in two years, offering much-needed reduction to the individuals amidst the worst monetary disaster.

In an announcement, the Census and Statistics Workplace of the Sri Lankan authorities stated that the general price of inflation as measured by the Colombo Client Worth Index on a year-on-year foundation is 6.3 per cent in July 2023 and it was down from 12 per cent recorded in June this yr.

“The general price of inflation as measured by the Colombo Client Worth Index on a year-on-year foundation is 6.3 per cent in July 2023. This was down from the 12 per cent recorded in June,” the assertion stated.

The decline in headline inflation is broadly consistent with the disinflation path envisaged by the Central Financial institution of Sri Lanka (CBSL) in July 2023, the apex financial institution stated.

The final time single-digit inflation was recorded was 5.8 per cent in September of 2021. The best inflation because the island nation’s economic system got here beneath its worst disaster was 69.8 per cent recorded in September final yr.

The assertion additional stated that the lower in the price of meals commodities had contributed to decrease inflation. Over the previous 12 months, meals costs fell completely by 1.4 per cent, based mostly on the index.

“Wanting forward, based mostly on the accessible data, inflation is anticipated to reasonable additional and stabilise across the focused stage over the medium time period. This disinflation course of is supported by the lagged influence of tight financial and monetary insurance policies, enhancements on the provision facet, the softening of vitality and meals inflation, and the beneficial base impact,” the CBSL stated.

Sri Lanka within the unprecedented foreign exchange disaster curtailed imports resulting in scarcities and excessive costs.

However since securing the IMF bailout of USD 2.9 billion in March this yr the relief of import restrictions plus motion to finish energy shortages had improved the scenario drastically.

Governor of the Central Financial institution Nandalal Weerasinghe had stated the nation ought to report single-digit inflation by the third quarter of this yr.

Sri Lanka, which introduced its first-ever sovereign default in April 2022, has negotiated with the IMF for a bailout of USD 2.9 billion.

The island nation confronted its worst financial disaster in historical past because of a scarcity of international alternate reserves.

An crucial within the IMF bailout is to restructure exterior debt, which must be accomplished by September.