As Sri Lanka struggles with increasing inflation and depleting foreign reserves, the government unveiled a new scheme recently to tackle skyrocketing essential commodity and food prices. 

The country’s retail inflation hit a new high of 15.1 percent while fod inflation spiked to 25.7 percent  in  February – the highest in a decade , owing mostly to governments ad hoc policy decisions and patch work .

These back firing policies have wreaked havoc on the country’s tourism and migrant worker remittance -dependent economy. 

The government enforced import bans and raised fuel prices earlier to shore up its currency reserves, resulting in shortages and spiking costs of essential items.

Many goods and medicines have increased by around 30 percent, with some essential items  growing even more.

Trade Minister Bandula Gunawardena recently disclosed that “ the ministry is  introducing a new system to prevent consumers from paying black market prices for in-demand commodities.”

Import restrictions and increased fuel prices have been implemented by the government, resulting in shortages of essential  food and non food items.

He said“To meet the shortage, the government has imported rice, which is now being sold at Rs140) per kilo in all trade outlets, compared to the market price of Rs240 per kilo.” Traders and the government should work together to alleviate the hardships of the common man.”

Retailers, on the other hand, believe they have little alternative but to boost prices since rising fuel prices have disrupted supply lines. 

Delivery from adjacent villages has practically come to a standstill, according to vegetable dealers in Colombo, who claim that 75 percent of their supply has not made it to the capital city Colombo’s  market places.

Sri Lanka National Medicine Regulatory Association (NMRA) has given permission to raise drug prices by 29 percent on the request of private importers due to steep depreciation of rupee against the US dollar.

Meanwhile, the Federation for Health Professionals (FHP) said, state hospitals are experiencing a shortage of more than 50 essential drugs and specialists have had to plan their treatments with just a few of the more affordable substitute medicines.

“The NMRA is a farce. It is a dangerous farce. If the rulers want to keep prices down, not only of drugs but of all goods, first follow prudent monetary and fiscal policies that allows for exchange rates to be stable” several eminent economists said.

The Essential Foods Importers’ Association says that the prices of many essential food items have increased by 30 to 40 percent .

Its media spokesperson, Nihal Seneviratne stated that the price increases were caused due to the prevailing dollar crisis.

Prices of many items were increased last Friday (10) and Sunday (13), with an increase in bus fares and three wheeler fares on  Tuesday (15).

Ceylon Petroleum Corporation raised fuel prices by about 75 percent. While a kilo of wheat flour price was raised by Rs.35, price of a loaf of bread went up by Rs.110 to 130, indicating a rise of about 60 to 70 percent. 

Private bus owners have  increased bus fares with the initial fare at Rs.20 while three wheeler drivers have jacked up fares to Rs 60 per kilometer and the fare of first kilometer fixed at Rs.80.    .

When these price hikes took place, the cost of food had already gone up by 25 percent.

Container transporters’ association announced a 60 percent hike in transport hires. With such heavy increases in transport cost, all items including consumer goods will see an increase of about 40 percent or more in prices this week. 

With price controls removed, prices of goods in the coming weeks will be decided by the dollar crisis in foreign exchange. That would also decide scarcities of goods in the market.