Inflation in Sri Lanka could climb as high as 7 per cent due to rising fuel prices and the prolonged conflict in the Middle East, Central Bank Governor Dr. Nandalal Weerasinghe has warned.
Speaking during a televised interview, he noted that while the war in the Middle East was initially expected to ease, its continuation has already had a severe impact on the economy.
“We still don’t see any reduction in consumption. That is why there is a risk that inflation, which is at 5%, could rise further. Fuel prices have risen again this week, pushing inflation beyond the current 5.4%–5.5% range. If this continues, inflation could even reach 7%,” Weerasinghe said.
The Governor explained that the Central Bank tightened monetary policy last week to moderate demand over the next three months and prevent further inflationary pressure.
“Through that, in the next three months, demand will be somewhat moderated. Reducing demand to prevent inflation from rising further is very important for the country,” he said. (Newswire)
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