Food importers warn 10-20% price rise ahead of festive season as industry stakeholders seek to reassure consumers that essential supplies will remain uninterrupted despite mounting global cost pressures and geopolitical uncertainties.
Food importers warn 10-20% price rise ahead of festive season amid cost pressures
Sri Lanka’s essential food import sector has moved to calm concerns over potential shortages ahead of the Sinhala and Tamil New Year, even as it signals a notable increase in retail prices driven by rising fuel, freight, and insurance costs. G. Vinayagasundaram, President of the Essential Food Commodities Importers and Traders Association (EFCITA), emphasised that supply chains remain intact following recent discussions with government authorities.
Speaking after a meeting with the Trade Ministry, Vinayagasundaram noted that Sri Lanka continues to maintain adequate stocks of essential goods, ensuring that there will be no immediate shortages in the lead-up to the festive season. However, he cautioned that the cost environment has shifted significantly, with higher global energy prices and shipping-related expenses exerting upward pressure on food import costs Sri Lanka.
“We estimate that retail prices could rise by 10-20% in the coming weeks,” he said, highlighting the combined impact of increased bunker fuel prices, escalating war risk insurance premiums, and currency depreciation. These factors have collectively driven up landed costs across a broad range of staple food items.
The warning comes at a particularly sensitive time, as households prepare for increased spending during the festive season. Economists have pointed out that rising costs are likely to be reflected in consumer purchasing patterns, with higher prices affecting everyday essentials in what is already a challenging cost-of-living environment.
Sri Lanka, as a net importer of both food and fuel, remains highly exposed to fluctuations in global markets. The current volatility, largely influenced by ongoing tensions in the Middle East, has disrupted traditional shipping dynamics. Maritime routes passing through key regional chokepoints have seen heightened risk assessments, prompting insurers to revise coverage terms and premiums.
War risk insurance, a critical component of international trade logistics, has become a major cost driver. This form of insurance covers potential losses arising from conflict and related risks—elements typically excluded from standard marine policies. Without such coverage, commercial shipping operations cannot proceed, as ports, financial institutions, and charterers require proof of adequate insurance before facilitating cargo movement.
As premiums rise, freight costs inevitably follow. Shipping companies have also begun adjusting routes to mitigate risks, often opting for longer transit paths that increase both delivery times and expenses. These adjustments have had a cascading effect on supply chains, contributing to the anticipated price increases flagged by importers.
Despite these challenges, Vinayagasundaram stressed that supply continuity remains stable. Perishable goods such as onions, garlic, and potatoes are maintained on a rolling inventory basis, typically stocked for two-week periods with regular replenishment cycles. Current shipment schedules remain largely unaffected, ensuring that availability is not immediately compromised.
However, there are early signs of strain within the system. The Association noted that recent consignments of lentils from Canada and Australia have experienced minor delays, reflecting tightening shipping conditions and increased logistical complexity. While these disruptions have not yet impacted availability, they underscore the fragility of supply chains under current global conditions.
The Government, meanwhile, faces the dual challenge of maintaining supply stability while managing the broader economic impact of rising import costs. With domestic fuel prices already elevated and inflationary pressures persisting, the anticipated increase in food prices adds another layer of concern for policymakers.
Industry stakeholders have reiterated that as long as maritime corridors remain operational, Sri Lanka will be able to secure essential imports, albeit at higher costs. However, a prolonged escalation in geopolitical tensions or further tightening of insurance markets could present more significant challenges in the months ahead.
In this context, Food importers warn 10-20% price rise ahead of festive season serves as both a cautionary signal and a reassurance. While consumers may face higher prices in the near term, the absence of supply shortages provides a measure of stability as the country navigates a complex and evolving global trade environment. The situation highlights the critical importance of resilient supply chains and adaptive policy responses in safeguarding food security during periods of external uncertainty.