Sri Lank'a inflation of 25 per cent during April is the highest rate of price rise in Asia, the Financial Times has reported quoting a study by the London-based HSBC Bank.

According to HSBC Bank’s Global Research report – “Sri Lanka Inflation: How High will it Go?” , Sri Lanka has the highest annual inflation in Asia with April figures touching 25 per cent while Vietnam at 21.4 per cent has the second highest inflation rate in the region during the month.

A steep rise in prices of essential commodities and other items have pushed inflation in Sri Lanka to 25 per cent.

Going by the New Colombo Consumers Price Index (CCPIN), the study says, the country has a history of high inflation, averaging around 11 per cent year-on-year since 1990.

It also said policy management has not been consistently successful in controlling price pressures on economy.

The report said since Sri Lanka is a net importer of food and imports its entire petroleum requirement, a large part of the increase in inflation can be explained by surging international food, commodity and oil prices. However, it is strong demand at home that has allowed retailers to pass the cost increases on to the consumer.

"From a longer term perspective, we believe steps should be taken to boost the potential growth rate of the economy so that Sri Lanka can maintain a 7 per cent rate of real economic expansion without fanning inflationary pressures," the report said.