COLOMBO, Sri Lanka – Sri Lanka’s government has celebrated a string of economic and governance milestones, from a stable exchange rate to foreign reserves above US$6 billion. Yet for many households, the price of everyday essentials remains stubbornly high.
While inflation has dropped sharply from the 2022 hyperinflation crisis, the cost of food, fuel, and utilities has not returned to pre-crisis levels. Food inflation still hovers near 6 percent, and wages have failed to keep pace with previous price surges. The result: even with “low” or “negative” inflation, families continue to spend a large share of their income on basic necessities.
The government’s achievements include seven key areas: macroeconomic stability, improved debt management, anti-corruption measures, higher foreign direct investment, stronger government revenue, better governance, and large-scale infrastructure projects. However, economists note these gains do not automatically translate into lower living costs.
“A stable exchange rate slows future price hikes, but it doesn’t roll back the price base established during the crisis,” said one Colombo-based analyst. Anti-corruption campaigns, while vital for governance, deliver long-term benefits rather than immediate price relief. Likewise, higher foreign investment often flows into ports, power plants, and real estate—projects that do little to cut grocery or utility bills in the short term.
Imported inflation remains a critical pressure point. Sri Lanka still relies heavily on imports for fuel, wheat, milk powder, and fertiliser. Global price swings in these commodities quickly filter into local markets, regardless of domestic policy success. A sudden jump in global oil prices, for example, would raise transportation, electricity, and food costs across the country.
Some reforms may even add short-term cost pressures. Major infrastructure projects can push up land prices and wages in specific sectors before their productivity gains are felt. In addition, government revenue gains are often channelled into debt repayment or capital works rather than subsidies or tax cuts on essentials.
Experts suggest that real relief will require targeted strategies: boosting domestic food production, reforming monopolies in energy and transport, and ensuring wage growth keeps pace with productivity. Vietnam’s investment in agriculture, the Philippines’ power market reforms, and South Korea’s wage-adjustment mechanisms are cited as examples that could guide Sri Lanka’s policy direction.
Without such measures, the gap between national economic performance and household affordability is likely to persist. For now, Sri Lanka’s recovery is a success story on paper—but not yet at the kitchen table.
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