📈 Rising Import Costs & Global Uncertainty Hits Consumers

• Overall Impact: Sri Lankan consumers face immediate price hikes and potential shortages driven by the continuous depreciation of the Sri Lankan Rupee against the US Dollar and a lack of clear government contingency planning. • Key Price Revisions: The Milk Powder Importers’ Association revised imported milk powder prices upward due to market conditions and exchange rate fluctuations. The price of a cup of milk tea increased by Rs. 5 effective today. Importers warn of impending price hikes for essential commodities, including sugar, dhal, and rice. • Supply Disruptions: India—which supplies over 50% of Sri Lanka's sugar—has banned all sugar exports with immediate effect until 30 September 2026, threatening local shortages and price spikes. • Sector Breakdown: Tourism & Hospitality: Tourist arrivals for April recorded a 22.3% YoY decline compared to April 2025 due to Middle East tensions, severely impacting the local hotel sector. Automotive & Reserves: A relaxation on vehicle imports has caused a significant dent in foreign reserves, prompting the government to consider a steep tax on vehicle imports alongside maintaining the fuel rationing (QR code) system to conserve fuel.