Sri Lanka’s national inflation hits 6.1-pct in May

Sri Lanka’s nation-wide inflation measured by the National Consumer Price Index hit 6.1 percent in May 2021, the highest since September 2020, when in it 6.4 percent, data from the state statistics office showed.

The index grew 1.0 percent during the month to 143.5 points from 142.2 points in April.

The food and non-alcoholic beverages sub-index was up 10.3 percent from a year earlier.

Sri Lanka has been printing record volumes of money over the past year under so-called Modern Monetary Theory (MMT), leading to historic balance of payments deficits, which had absorbed some of the liquidity.

The rupee had fallen from around 182 to the US dollar to 200 over the past year with the fall accelerating during 2021.

The US Fed has also been printing money and there is strong expansion in US broad money supply driven by strong recovery in credit.

Due to the peg with the US dollar, inflation of the dollar flows to the country through export price gains and also imports.