RPT- Galloping Inflation Forces Sri Lankan Households to Cut Meals

(Repeats story that ran on Friday, with no changes)

By Uditha Jayasinghe

COLOMBO, July 1 (Reuters) – With an unemployed husband, housewife Sujeewa Nelum Perera is all too familiar with the struggle to feed a family of four in Sri Lanka and has been forced to reduce the number of meals they consume. record high food prices.

Perera’s husband, an auto rickshaw driver, has been unable to earn a wage for two weeks as the country’s dwindling fuel reserves have prompted authorities to limit fuel supplies to essential services only.

“We need about Rs 2,000 ($5.50) per day for meals. But with food prices rising daily, we need about two meals,” Perera, 38, told Reuters while shopping for groceries in a suburb of Kelaniya. from about 9 miles (5.6 miles). miles) from the commercial capital Colombo.

Sri Lanka’s inflation stood at 54.6% in June, partly as a result of the worst financial crisis in decades, and economists say policymakers can do little to lower prices in the near future.

The island of 22 million people is wilting due to a severe foreign exchange shortage, making it difficult to pay for essential imports of fuel, fertilizer, food and medicine and has prompted people to take to the streets in protest.

The crisis comes after COVID-19 has hammered the tourism-dependent economy and cut remittances from foreign workers, and has been exacerbated by the build-up of massive government debt, soaring oil prices and a ban on chemical fertilizer imports last year that ravaged agriculture.

Food inflation reached 80.1% year-on-year in June, while transportation costs rose 128%, official data shows.

With food prices rising, 70% of households now report reduced food consumption, UNICEF said in a statement earlier this month.

To consume a healthy diet as recommended by the World Health Organization, a household should consume between Rs. 93,675 to Rs. 148,868, said Rehana Thowfeek, an economist who specializes in tracking food inflation.

However, the median household income of Sri Lanka is only Rs. 76,414 per month and the poorest 20% earn only Rs. 17,572, according to official data.

To make matters worse, most vegetable prices have more than doubled, while rice, an essential ingredient, has risen from Rs. 145 per kilogram a year ago to Rs. 230.


Sri Lanka is in talks with the International Monetary Fund for a possible $3 billion bailout, but it could take several months for a program to materialize.

Analysts said inflation could peak in July but will hover around 50% for the rest of the year.

“We expect an IMF program in the second half of the year. But even then, inflation will only reach 10%-15% by June 2023,” said Dimantha Mathew, an analyst at First Capital Research.

The central bank raised rates by a record 700 basis points in April to curb inflation and stabilize the currency, but is expected to keep rates unchanged at the next policy announcement on July 7.

“Sri Lanka is mainly dealing with cost inflation, mainly due to high fuel prices, so the central bank can do little to tame this,” Mathew said.

In Kelaniya, Perera has cut costs by eliminating legumes, fresh fish and chicken from the family diet. Milk has also become a luxury item, including for her 12-year-old daughter and 8-year-old son.

“It’s just too expensive. Even eggs now I only make for the two kids. My husband and I do without. Prices will continue to rise and we are told the worst is yet to come. I don’t know how we will live. “​

(Reporting by Uditha Jayasinghe; editing by Swati Bhat and Susan Fenton)

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