COLOMBO, Sri Lanka (AFP) — Cash-strapped Sri Lanka’s economy recorded falling consumer prices for the first time in 29 years, official data showed Monday, with the September inflation figure dipping to negative 0.5 per cent.

Census and Statistics Department data showed price drops in both food and non-food goods contributing to deflation in September, compared to inflation of 0.5 percent in August.

Sri Lanka last recorded deflation in March 1995 with a figure of negative 0.9 per cent. The previous price fall to that was in 1985, when inflation was negative 2.1 per cent.

Inflation peaked at 69.8 per cent two years ago at the height of an unprecedented economic crisis in the island nation.

Acute shortages of food, fuel and medicines led to months of protests that eventually forced then-president Gotabaya Rajapaksa to temporarily flee the country and resign in July 2022.

His successor Ranil Wickremesinghe secured a US$2.9 billion International Monetary Fund bailout and raised taxes and prices to stabilise the economy.

Wickremesinghe lost office after a presidential election this month.

The winner of that contest, President Anura Kumara Dissanayake, has vowed to maintain the IMF programme but relax some of the austerity measures it imposed.