ECONOMYNEXT – Inflation measured by the Sri Lanka Christmas cake, broadly acclaimed to be the world’s most scrumptious, wealthy, ‘decadent’ and attention-grabbing confection of its variety, has risen by 4.4 p.c in 2025, amid rupee depreciation, an evaluation of retail costs present.
The price of 11 key components rose to fifteen,180 rupees by 2025, up from 14,744 in 2024 with rupee inflating 5.3 p.c.
Guidelines vs Discretion
Within the 12 month to November, the rupee fell from 290.90 rupees to 306.30 to the US greenback, because the central financial institution selectively denied convertibility to non-public residents and acquired {dollars} in extra of deflationary coverage, pushing the unlucky foreign money down.
Sri Lanka’s foreign money is inadequately shielded from discretionary central financial institution motion (versatile alternate fee) analysts have stated.
However over 24 months the Sri Lanka (World’s Most Scrumptious) Christmas Cake Index confirmed deflation of 4.6 p.c.
The Colombo Shopper Worth Index rose 2.1 within the 12-months to November 2025. Within the 24 months to November 2025, the index was unchanged at 193.4 factors, exhibiting zero inflation.
In 2025 Sri Lanka’s central financial institution prevented inflationary open market operations and ran a classical fashion scarce reserve regime, giving stability to home costs and missed its inflation goal.
The central financial institution however minimize charges in Could which analysts stated lowered the ‘buffer’ to gather reserves and repay debt, by driving up personal credit score.
To guard the folks and stop a subsequent default from the sharp fringe of discretionary inflationism (versatile inflation concentrating on) from a excessive inflation goal which seems to be a ground, calls have been made for a real restraint made up of a low ceiling.
RELATED : Sri Lanka ought to mandate 2-pct inflation ceiling to avert subsequent financial disaster
In 2025, US financial coverage was comparatively benign, with regular amount tightening (deflationary coverage), barely taming its ample reserve regime, which critics say is without doubt one of the deadliest frameworks ever seen within the historical past of notice concern banking.
The Sri Lanka Christmas cake is a results of Dutch, British influences and a mixture of candied components made by conventional processes present in Sri Lanka (chow-chow and pumpkin protect), and imports (sultanas, raisins, and cherries)
“The Romans might need invented the fruitcake, however Sri Lanka, a tiny island within the Indian Ocean, perfected it,” Australian foodie channel SBSFood.com says in a put up titled One of the best Christmas cake you’ll ever eat comes from Sri Lanka.
“The cake is historically iced with marzipan created from native cashews, not almonds, then minimize into small rectangles and wrapped in colored cellophane.
“Sri Lankan Christmas Cake is shouldn’t be your typical fruit cake,” provides kitchensimmer.com
“Sure, it has some fruit and nuts, however it’s bought a lot extra wealthy and scrumptious components that it’s bursting with taste.”
“For years I firmly believed that I had tried each single variation of the Christmas cake doable. Gentle, darkish, moist, dry, British, Scottish, Italian, Serbian, in response to an award successful meals blogger and author at Food52.com.
“I’d have by no means thought that the richest, essentially the most decadent, essentially the most attention-grabbing and essentially the most scrumptious Christmas cake of all would come from Sri Lanka.”
Financial Meals Bubble
The Sri Lanka Christmas cake doesn’t use flour, however semolina.
Semolina costs shot as much as 752 rupees a kilogram in 2022, with the Fed firing an enormous commodity bubble after Covid-19 linked injections, because the rupee additionally collapsed from 200 to 360 to the US greenback in a float failed by a one-sided convertibility endeavor (give up rule).
Amusingly, inflationist macro-economists in addition to the Worldwide Financial Fund, blamed Putin for the worldwide commodity and power bubble.
However the Fed started deflationary coverage and fee hikes in March 2022 and wheat costs began to fall from the second half of 2022.
Semolina costs have since halved in Sri Lanka to round 350 rupees a kilogram and stayed there. The Sri Lanka rupee was additionally appreciated in 360 to 300 by the central financial institution by deflationary coverage and lifting of the give up rule.
Nevertheless in 2025 rupee was once more depreciated by extra greenback purchases by the central financial institution (sturdy facet convertibility when the rupee was not sturdy) and selective weak facet convertibility.
RELATED : Sri Lanka’s alternate fee depreciation by ‘Political Ravishment’
Nevertheless, the Federal Reserve deflationary coverage has since been ended. Gold costs hit 4,480 {dollars} an oz. in December 2025.
Gold was 20 {dollars} an oz. when the Fed Reserve was created and for about two centuries earlier.
The Fed invented open market operations giving rise to peacetime financial bubbles that imposed immense hardships on the poor in addition to companies and authorities funds, after they burst. (Colombo/Dec25/2025)
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