The Strategist

Sri Lanka's economy reaches hyperinflation

07/01/2022 - 03:09

According to Sri Lanka's Central Bank, consumer prices increased by 54.6 percent in June compared to the same month last year.

Patty Ho
Patty Ho
The inflation rate exceeded the 50% threshold, price hikes above which analysts consider to be constituting hyperinflation.

Bloomberg surveyed analysts, and their average estimate for Sri Lanka's inflation rate for the month was 43.7 percent; the actual result was significantly higher.

The island nation has almost no money to buy fuel, thus the cost of transportation and food is rising the fastest. As a result, prices for food and non-alcoholic beverages as well as transportation increased by 128 percent and 80%, respectively, by the end of June.

Sri Lanka has been going through its biggest crisis since gaining independence in 1948. On April 12, the nation ceased making any more payments under loan and bond arrangements, going into default on its obligations to third parties.