Lanka has sixth highest food price inflation: World Bank

The World Bank in their latest assessment put out a list of 10 countries with the highest food price inflation. Sri Lanka was ranked at sixth with a percentage of 86%, while Zimbabwe was at the top spot with a staggering 321%.Most notably according to the report Sri Lanka’s food inflation is observed to be worse than that of countries such as Suriname, Rwanda and Iran as well.

Zimbabwe, Lebanon, Venezuela and Turkey ranked first four countries in the assessment while Iran, Sri Lanka, Argentina, Moldova, Rwanda and Ghana were the remaining countries in the list published by the World Bank.

The World Bank in its latest update for the month of October had opined that domestic food price inflation would continue to rise, especially in low and middle-income countries, including African nations.

When faced with probable food shortages at the start of the COVID-19 pandemic, countries actively used trade policy to adapt to domestic demands.As of July, Sri Lanka is experiencing major domestic food supply shortages.Due to fertiliser shortages, agricultural production in Sri Lanka has reduced by 40% to 50%, and there is a scarcity of foreign exchange to purchase food imports.

“Fertilizer and fuel (for land preparation, transport, and harvesting activities) shortages are expected to limit the food supply. Some relief is coming from the first shipment of 44,000 tonnes of urea supported by Indian credit (and 21,000 tonnes is expected to arrive soon). There has been an increase in demand for Indian rice, with roughly 9.6 million tonnes shipped this year,” the assessment stated.

Exporters are rushing to secure letters of credit and have signed contracts to export 1 million tonnes of rice from June to September 2022, fearing that export restrictions may be imposed (as has happened with wheat). Furthermore, food price inflation in Sri Lanka reached 80%.

“Domestic food price inflation remains high around the world. Information between May to August 2022 shows high inflation in almost all low-income and middle-income countries; 88.2 per cent of low-income countries, 91.1 per cent of lower-middle-income countries, and 93 per cent of upper-middle-income countries have seen inflation levels above 5 per cent, with many experiencing double-digit inflation. The share of high-income countries with high inflation has also increased sharply, with about 82.1 per cent experiencing high food price inflation,” the update read.

The bank noted that there has been another increase in fertilizer prices, in addition to increasing energy prices, as policy measures such as export restrictions have limited global fertilizer availability.

“The war in Ukraine has altered global patterns of trade, production, and consumption of commodities in ways that will keep prices at high levels through the end of 2024 exacerbating food insecurity and inflation. High food prices have triggered a global crisis that is driving millions more into extreme poverty, magnifying hunger and malnutrition,” the bank added.