Record Sri Lanka Inflation As Food Crisis Looms

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Sri Lanka’s tourism-dependent economy was hammered by the pandemic and the government imposed a broad import ban to shore up foreign exchange reserves, triggering shortages of essential goods.

Record Sri Lanka Inflation As Food Crisis Looms

Supermarkets have for months been rationing milk powder, sugar, lentils and other essentials.

Colombo, Sri Lanka:

Sri Lanka’s inflation hit a record 11.1 percent in November, official figures showed Wednesday, as authorities warned a worsening economic crisis could prompt further food rationing.

The island’s tourism-dependent economy was hammered by the pandemic and the government imposed a broad import ban to shore up foreign exchange reserves, triggering shortages of essential goods.

Supermarkets have for months been rationing milk powder, sugar, lentils and other essentials as commercial banks ran out of dollars to pay for imports. 

On Wednesday official data showed prices soaring at their fastest rate since the National Consumer Price Index (NCPI) was launched in 2015, with food prices up 17 percent from a year ago.

Authorities may have to impose further food rations and seek foreign aid to help feed the most needy, agriculture ministry secretary Udith Jayasinghe told reporters.

“We may have to borrow grains such as corn from friendly countries and think of rationing food so that mothers and the sick can be fed,” he said.

“Others may have to make sacrifices.”

But within hours Jayasinghe was replaced by another official, President Gotabaya Rajapaksa’s office announced, without saying why he was sacked.

Food shortages have been worsened by the government’s ban on agrochemical imports, which was lifted last month after widespread crop failures and intense farmer protests.

Sri Lanka had foreign reserves of just $1.58 billion at the end of November, down from $7.5 billion when Rajapaksa took office in 2019.

The central bank has appealed for foreign currency — even loose change that people may have after returning from overseas trips.

Earlier this week ratings agency Fitch downgraded Sri Lanka due to mounting fears of a sovereign default on its $26 billion foreign debt. The government insisted it can meet its obligations.

(This story has not been edited by our staff and is auto-generated from a syndicated feed.)

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