Sri Lanka’s headline inflation measured by Hanke’s Annual Inflation Index hit a staggering 74 percent in the year through April 15, 2022 as prices from energy to staples to discretionary items received a jolt last month from the botched rupee float.
Prof. Steve Hanke, an Economist at John Hopkins, a private research university in Baltimore, Maryland in the United States, measures the inflation in countries with currency troubles, taking the true underlying factors such as the opportunity cost and other associated costs one has to undergo when a good or service is purchased.
But the official headline inflation of 18.7 percent measured by the Colombo Consumer Price Index for March. The Central Bank on April 8 forecasted the official inflation at 28 percent in the next three months.
However, some economists disagree with Hanke’s index of inflation as it is based on the idea of what is known as purchasing power parity, a concept, which measures the ability of a person who earns in rupees to buy stuff versus a one who earns in dollars.