Covid: Food costs are rising in Sri Lanka, putting the country’s economy in threat

Authorities said they’ll seize control of vital food supplies, including rice and sugar, and set prices in an effort to rein in growing inflation.

This year, the Sri Lankan rupee has lost 7.5 percent against the US dollar. The government has chosen a retired army general as commissioner of critical services, with the authority to seize supplies held by traders and retailers.

The president of the island nation, Gotabaya Rajapaksa, announced in a statement that “authorized officers will be allowed to take actions to deliver basic food goods at a concessionary price to the public by purchasing inventories of vital food items.”

“To avoid market inconsistencies, these items will be offered at government guaranteed pricing or based on the customs value of imported goods,” the statement continued.

Following a spike in the price of basic foods such as sugar, onions, and potatoes, the statement was made. Long lines have formed outside stores owing to shortages of other items such as milk powder, kerosene, and cooking gas.

The increase in the foreign currency rate, according to the country’s Department of Census and Statistics, was one of the causes of increased prices of numerous necessary commodities over the last year.

In August, month-on-month inflation increased to 6%, owing primarily to high food prices, according to the department.

The country, which is a net importer of food and other goods, is experiencing an increase in coronavirus infections and deaths, which has harmed tourism, which is one of the country’s key sources of foreign cash.

Sri Lanka’s economy dropped by a record 3.6 percent last year, owing in part to a drop in tourist numbers.

The government put an import restriction on autos and other products in March of last year in an attempt to curb the outflow of foreign currency.

Sri Lanka became the first country in the region to hike interest rates earlier this month, in a bid to support its currency and alleviate the inflationary pressures caused by high import costs.

Due to an increase in Covid-19 instances, Sri Lanka is currently under a 16-day curfew till Monday.