Sri Lanka hikes fuel prices as inflation surge

Sri Lanka has increased fuel prices by nearly four per cent, deepening inflationary pressures as the country grapples with economic recovery challenges worsened by global tensions.

The latest adjustment, announced on Sunday by the state-owned Ceylon Petroleum Corporation, comes as inflation more than doubled in April, driven largely by rising energy costs linked to the Middle East crisis.

Under the new pricing regime, kerosene widely used in agriculture rose by 10 rupees to 265 rupees per litre, while petrol increased by 12 rupees to 410 rupees. Diesel also climbed by 10 rupees to 392 rupees.

Since March, fuel prices in the country have surged by over 35 per cent, with gas and electricity tariffs rising at a similar pace.

The latest development comes as Sri Lanka continues to recover from its 2022 economic meltdown, when it exhausted foreign exchange reserves needed to import essential goods such as food, fuel, and medicine.

Efforts to stabilise the economy have been supported by a $2.9 billion bailout programme from the International Monetary Fund agreed in 2023.

Authorities have also introduced fuel rationing measures amid ongoing supply disruptions.

Inflationary pressure mounts

According to official data from the Department of Census and Statistics, inflation rose to 5.4 per cent in April, more than double the previous month’s figure.

Officials say higher fuel and electricity tariffs have significantly driven up transport fares and food prices, intensifying the cost-of-living crisis for citizens.

Additional setbacks

Recovery efforts have also been hindered by natural disasters, including a devastating cyclone in November that killed at least 643 people and affected more than 10 per cent of the population.

The World Bank estimated the storm caused about $4.1 billion in damage to infrastructure and agriculture.

With energy prices continuing to climb, analysts warn that inflation could remain elevated, posing a major risk to Sri Lanka’s fragile economic recovery and social stability.