The island nation defaulted on its US$46 billion foreign debt in April 2022 after a foreign exchange wipeout left it unable to import food, fuel and other essentials.

This month’s inflation reading, from the benchmark Colombo Consumer Price Index, is a huge drop from the peak of nearly 70% in September of that year.

The central bank this week cut its benchmark lending rate from 10% to 9.5% — the first reduction in four months — in a measure it said would boost “the ongoing revival of economic activity”.

Months of protests during the economic crisis led to the ouster of then-president Gotabaya Rajapaksa when demonstrators stormed his residence.

His successor Ranil Wickremesinghe has sharply raised taxes, cut energy subsidies and secured a US$2.9 billion rescue package from the International Monetary Fund.

Both Wickremesinghe and the IMF have said the South Asian nation was “gradually” emerging from the crisis following the austerity measures.