Sri Lanka’s key inflation rate eased to 57.2 per cent in December from 61 per cent in November, the country’s statistics department said on Friday.

The Colombo Consumer Price Index (CCPI) reflected a 64.4 per cent jump in food prices from a year earlier and a 53.4 per cent climb in the non-food group, the Census and Statistics Department said in a statement.

Sri Lanka has been struggling with soaring prices for over a year, largely caused by its worst financial crisis in over seven decades.

“Inflation will continue to ease in the new year but that does not mean prices will start to decline. It is just a stabilisation of prices,” said Rehana Thowfeek, an economist for Colombo-based think tank Advocata Institute.

Despite the decline in inflation, the Central Bank of Sri Lanka, which raised policy rates by a record 950 basis points this year to contain inflation, is unlikely to loosen rates until a $2.9 billion bailout package from the International Monetary Fund is finalised, she added.

The bank’s governor Nandalal Weerasinghe predicted that if the current trend of monetary policy was followed, inflation could drop to 4 per cent-5 per cent by the end of next year.

The Colombo consumer price gauge is closely watched as a lead indicator for broader national prices and shows how inflation is evolving in the biggest city of Colombo.

Sri Lanka’s national consumer price inflation, which is released with a lag of 21 days every month, eased to an annual rate of 65 per cent in November from 70.6 per cent in October.