Steep Rise

May 24, 2008 (LBO) – After dragging their feet for months Sri Lanka’s state-run Ceylon Petroleum Corporation (CPC) jacked up diesel prices by an unprecedented 37 percent and petrol by 23 percent, while a unit of Indian Oil Corporation said it would follow suit. An International Monetary Fund study said this week that commodity markets were suffering from a ‘monetary shock’.

The report and advocated a return to aggressive quantity targeting seen in the early 1980s to bring commodity prices to earth.

Oil, gold, and food commodities are now caught in the worst bubble since 1973 when excessive money printing by the United States made the country to default on its obligations under the Bretton Woods agreement.

In that year the US broke the link with gold and the US dollar became a fully fiat paper currency creating conditions for rampant inflation and commodity bubbles.

Updated Standard auto diesel was raised by 30 rupees to 110 rupees a litre while 90-octane petrol was also raised by 30 rupees to 157 rupees.

Super diesel would go up by 40 rupees to 125.30 rupees and 95-octane petrol by 40 rupees to 170 rupees.

Lanka IOC which raised diesel by 20 rupees a litre last week said it would follow CPC pricing with effect from midnig