Sri Lanka’s inflation rockets to 24.1-pct amidst record money printing

Dec 15, 2007 (LBO) – Sri Lanka’s country-wide inflation hit a record 24.1 percent in October 2007, following one of the worst bouts of money printing seen since the island’s central bank was created five decades ago. The Sri Lanka Consumer Price Index (SLCPI) devised a decade ago to reflect the modern spending patterns of Sri Lankans, has now hit the highest level since its creation in January 1998.

The record inflation came after the Central Bank printed 45.2 billion rupees between May and September 2007 to bridge an expanding budget deficit.

According to data compiled by the government’s statistics office, its previous high was 18 percent reached in December 2004, a year which saw a reversal in fiscal discipline resulting in the Central Bank printing 65 billion rupees over a period of eight months.

Sri Lanka had been plagued with high inflation since a central bank with money printing powers was created in 1951 after scrapping a currency board regime that had kept the small island economy stable under British colonial rule.

In recent months there have been growing calls for fundamental reforms to the island’s central bank law to make it independent of the finance ministry and to put it under a le