Sri Lanka's Inflation Skyrockets

Colombo - The inflation of the country sky rocketed to an all-time high of 25.1 percent in April due to local mismanagement of economy and the looming bigger and bloodier war in the north part of the war ravaged island nation, an observer said in Colombo.

The IMF report that studied Sri Lanka's inflation in 2006 and 2007 found that "external shock" such as oil prices were only partly to blame.

"Since late 2006, Sri Lanka's inflation has increased sharply relative to other economies in the region," its latest report said.

"The sharp increase in inflation compared to other countries in Asia points out that increases in oil prices in the recent past cannot explain most of the increase in inflation in Sri Lanka," IMF report said.

Average inflation of the country for 2007 stood at 21.6 %. High inflation is not good for Sri Lanka and its share market in total shambles very bad news for Sri Lankan economy, an observer said.

Sri Lanka’s Central Bank Governor Nivard Cabraal said, Sri Lanka needs to control the inflation to achieve 7 percent growth this year.

"I hope the central bank will give priority to controlling inflation,"' said the head of research at Lanka Orix Securities Pvt. in Colombo. 

There is gloomy prospects for the Sri Lankan economy and Sri Lanka’s common man’s life is in total shambles due to the high inflation rate, depreciating rupee, share prices falling down, repeatedly rising fuel prices, the high interest rates, wide range of corruptions in the government, local mismanagement of the public funds, heavy tax increases on goods, the escalation of the violence and more importantly continuing war are all causing great impacts on the economy of the war ravaged nation of Sri Lanka an analyst told TNS.