Sri Lanka on Tuesday hiked petrol prices by 20% -24% and diesel prices by 35% -38%, Power and Energy Minister Kanchana Wijesekera said.
In a message on Twitter, Wijesekera said charges for government-scheduled transportation and other services would rise similarly. “Working at home will be encouraged to reduce fuel consumption and address the energy crisis,” he added.
Food and transportation price increases will flow through food and other commodities, economists say.
According to official data released on Monday, annual inflation in the island nation rose to a record 33.8% in April, compared to 21.5% in March.
Sri Lanka has been going through its worst economic crisis since independence, with severe foreign exchange deficits halting imports and the country suffering from shortages of fuel, medicine and electricity.
The financial crisis stemmed from the convergence of the COVID-19 epidemic in the tourism-dependent economy, rising oil prices and tax cuts by President Gotabaya Rajapaksa and his brother Mahinda’s government, who resigned as prime minister this month.
Economists say rising fuel and electricity prices will be needed to plug huge gaps in government revenue, but agree that this will lead to short-term pain.