Sri Lanka: Prices of essential commodities rise following currency devaluation

Colombo [Sri Lanka], March 12 : The prices of a number of essential commodities including fuel and wheat increased significantly on Friday following Sri Lanka's decision to relax the controls over the value of the Sri Lankan rupee, local media reported.
The Sri Lankan Rupee (LKR) depreciated to LKR 260 per US dollar on Thursday, The Island reported. The Sri Lankan Rupee has depreciated by Rs 57 against USD in a span of seven days.
The All Ceylon Bakery Owners Association increased the price of a loaf of bread by LKR 30. The new price of a loaf of bread is between 110 and 130 rupees. The country's biggest wheat importer. PRIMA increased the price of a kilogram of wheat flour by LKR 35, the report said.
At the same time, the Lanka Indian Oil Corporation (LIOC,) the country's second-largest retail fuel distributor, increased the selling price of diesel by a massive LKR 75 per litre and petrol by LKR 50 per litre.
With the rise in fuel prices, LIOC has effectively taken itself out from the local petroleum market and is pricing its products in line with economic realities, the report said citing Former Energy Minister Udaya Gammanpila.
In terms of a 2003 agreement between Sri Lanka and India with respect to LIOC's entry into the local market, the Indian enterprise had the right to increase its fuel prices unless Sri Lanka absorbed the losses. LIOC operates 211 fuelling stations in the Island country, the report added.
Former Minister Gammanpila said that the country lacked the wherewithal to meet the economic crisis.
"There is no point in denying that fact. The sacking of Wimal Weerawansa and Udaya Gammanpila wouldn't make a difference at all," the Pivithuru Hela Urumaya (PHU) leader was quoted. He also urged the government to work out a proper strategy at least now.
President Gotabaya Rajapaksa had removed Gammanpila from the ministerial portfolio on March 3 within 24 hours after a group of dissident constituents of the ruling Sri Lanka Podujana Peramuna (SLPP) unveiled an alternative economic plan, the report said.
Sri Lanka has been reeling under a severe economic crisis in recent years, with the COVID-19 pandemic virtually bringing the significant tourism industry of the island country to a standstill. In addition, a foreign exchange crisis, heavy Chinese debts, and a failed move to shift the country's agriculture to 100% organic has intensified the difficult situation.
Notably, India in the last six months has provided assistance on several fronts to its island neighbour to tide over its economic crisis.