Colombo, Jan 1 (PTI) Sri Lanka's inflation hit a double digit in December by increasing to 12.1 per cent year on year from 9.9 per cent in the previous month, the Central Bank announced on Saturday, adding to the financial woes of the country.

The monthly inflation measured by the Colombo Consumer Price Index was driven by monthly increase in prices of items in both food and non-food categories.

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The food inflation had increased to 22.1 per cent in December 2021 from 17.5 per cent in November 2021.

The inflation increased to 12.1 per cent in December 2021 year on year from the 9.9 per cent in November 2021, the Central Bank announced.

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While the fish and vegetables prices increased in food items, the cost of items in the non-food category recorded an increase mainly due to rise in prices observed in the restaurants and hotels, transport and alcoholic beverages and tobacco.

The core inflation had also increased to 8.3 per cent in December from 7.0 per cent in November.

The high inflation is recorded as Sri Lanka grapples with a major foreign exchange crisis to pay for its imports.

Most essentials are in short supply due to import restrictions and delays of shipments caused by payment hiccups.

At the end of November, the dollar reserves were only sufficient to pay for a month's imports.

Sri Lanka has faced downgrading by international rating agencies who have expressed doubts about the island's ability to meet its immediate international debt servicing.

Fitch last month downgraded Sri Lanka's sovereign rating to 'CC' from 'CCC', saying there is an increased probability of a default in coming months in light of the country's worsening external liquidity position underscored by a drop in foreign-exchange reserves.

The government while admitting to the foreign exchange crisis maintains that all debt payments would be duly met without any default.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)