Price hikes and Govt. complacency

One thing in Sri Lanka that goes up and never comes down is the cost of living. Yesterday there were more shocks for consumers with the Milk Powder Importers’ Association announcing a revision in the prices of imported milk powder, citing prevailing market conditions and exchange rate fluctuations.

This announcement was followed by the All-Ceylon Restaurant and Bar Owners Association announcing  that the price of a cup of milk tea will be increased by Rs. 5 with effect from today.

But there are more shocks for the public on the way where costs of goods are concerned.

There were warnings from importers of essential goods that  several imported goods are likely to increase in the coming weeks due to the continuous depreciation of the Sri Lankan rupee and the rising value of the US dollar. These include the prices of  essential food items, including sugar, dhal and rice.

India, which accounts for more than 50% of Sri Lanka sugar supply, announced this week that it was banning sugar exports with immediate effect until 30 September 2026, ‌ to control the hike in  local prices. The export ban will apply to  raw, white sugar and refined sugar. This ban will  impact Sri Lanka’s sugar market and prices will certainly rise while there may be even a shortage of sugar.

There is no word from the Government what back up plans it has in place , but the public will have to taste the bitter pill in any case.

Indian Prime Minister Narendra Modi announced a few days ago several austerity measures that are needed given the global uncertainty around the tensions in the Middle East. He urged Indian citizens to use more public  transport and electric vehicles, and revisit COVID-era measures such as WFH arrangements, virtual meetings, avoid non-essential foreign travel for a year, buy less gold, have smaller weddings and prioritise local goods. He pointed out that  foreign exchange spent on purchasing petrol-diesel should also be saved by conserving petrol-diesel.

Singapore Prime Minister Lawrence Wong warned citizens to stay prepared as recession fears, global conflicts, and economic uncertainty continue rising worldwide. He said tough times ahead could affect jobs, businesses, trade, and daily life if geopolitical tensions worsen further.

The Singapore PM announced that his Government has taken multiple relief measures by appointing a Homefront Crisis Ministerial Committee, headed by senior Government ministers in Coordinating and advisory roles to creating and updating contingency plans and also preparing new crisis management strategies as real time updates continue to happen.

But there are seemingly no such contingency plans by the Sri Lanka Government other than the announcement that the  fuel rationing system (QR code) could continue to conserve fuel and a decision to impose a steep tax  on vehicle imports.

It’s becoming clear now that the Government decision to relax vehicle imports has caused a massive dent in the country foreign reserves and this is an attempt to put a brake on it.

There has been a drop in tourist arrivals due to the Middle East situation with April recording a  22.3% decline  compared to April 2025. The  local hotel sector has been reeling under increasing prices and with tourist arrival also falling  this sector will once again suffer as it happened  during the pandemic as well as the 2022 economic crisis.

But this is just one sector, and the public are being burdened everyday with new  hikes of essential goods and services.  Despite this the Government has done little to reassure the public it has things under control in this period of global uncertainty. What the public have got so far are empty words and complacency.