Sri lanka food prices skyrocketed due to shortage and high import costs of imported food items including wheat, sugar and essential commodities in the dollar crisis and the devastation of agriculture following the government’s organic farming strategy.
In this backdrop an independent policy think tank based in Colombo Advocata in its latest survey revealed that Year on Year food price increase is now close to 50 percent.
The Sri lankan economy was in danger well before Russian tanks began rolling into Ukraine. Burdened by foreign debts and squeezed by the effects of the pandemic on its tourist receipts, the Rajapaksa government’s inconsistent short sighted and crazy policies including the going for organic farming overnight has destroyed the local agriculture creating food shortage, economic analysts said.
Now a devaluation of the currency and the impact of the war on commodity markets is sending consumer prices soaring.
Troops have been deployed to calm the crowds queuing for fuel, and a debt default may be unavoidable. As the prices of everything from oil and gas to corn and wheat surge prompting people to take the streets.
Advocata’s Bath Curry Indicator (BCI) , which tracks the monthly changes in the retail price of food, recorded an increase of 14% from March 2022 to April 2022. This is a year on year increase of 49% for this basket of food.
This is driven primarily by prices of dhal and samba rice being the highest recorded by the BCI. A kilo of Dhal in April 2021 was Rs 178, a year later it costs Rs 466. A kilo of samba in April 2021 was close to Rs 130, a year later this costs Rs 210. With food prices increasing at this rate, a family of four to spend on the BCI basket of food would have to pay approximately Rs 560 more for a week.
The Colombo consumer price index recorded a similar rate of 47% year on year increase in food inflation. Comparing supermarket food prices from March 2021 to 2022 there has been an increase of close to 40%.
This drastic increase in food prices in 2022 is a result of macroeconomic instability within the country. Although global prices have increased due to the pandemic and issues with supply chains, global prices have not increased as fast as the prices in Sri Lanka.
In Sri Lanka in addition to the global pandemic related issues, we are currently facing shortages of foreign currency which impacts local supply chains. This impact has also been exacerbated by consistent import restrictions, both causing shortages. These shortages compounded by the fact that the value of the currency has been falling steeply have all contributed to food prices rising faster and faster in 2022.
The BCI tracks the weekly retail prices in the Colombo market of the most commonly consumed food ingredients that might be used in a typical Buth curry meal. The prices are collected from the “Weekly Indicators” that the Central Bank publishes.
