Colombo: Sri Lanka has reported a significant decline in consumer prices, with deflation reaching 2.1 percent in November, marking the highest rate recorded since 1961.

This follows a period of severe economic turmoil that peaked in 2022, when inflation soared to nearly 70 percent due to a financial crisis that led to shortages of essential goods.

The country’s economic recovery has been supported by a $2.9 billion bailout loan from the International Monetary Fund (IMF), along with tax increases and austerity measures.

The central bank has indicated that negative inflation is expected to persist in the coming months, primarily driven by substantial reductions in energy prices and volatile food costs.

Prior to November, Sri Lanka experienced deflation rates of 0.8 percent in October and 0.5 percent in September.

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President Anura Kumara Dissanayake, who assumed office in September, has committed to upholding the IMF bailout program initiated by his predecessor, which includes higher taxes and cuts in government expenditure.

The central bank anticipates inflation will stabilize at around five percent in the near future.