ADB ranks SL second in SA for highest increase in food price inflation

The escalation in food prices witnessed in Sri Lanka as it grapples with the pandemic has placed the island nation amongst the four countries in South Asia that has the largest increase in food price inflation, according to the Asian Development Bank (ADB).

As per ADB’s ‘Key Indicators for Asia and the Pacific 2021’ report that was released this week, Sri Lanka had the second largest increase in its food price inflation in 2020.

While food inflation increased in 29 of the 41 countries ADB reports on, 17 nations posted food inflation of 5 percent or higher. However, Sri Lanka saw its food inflation read double digits alongside Pakistan, the Kyrgz Republic and Bhutan.

According to the report, the highest increase in food inflation was observed mostly in lower-middle-income economies, mainly Pakistan with 11.3 percentage points, Sri Lanka with 10.6 percentage points, the Kyrgyz Republic with 10.3 percentage points and Bhutan with 7.8 percentage points. 

“In developing Asia, the share of food to the total consumption basket is high, reaching approximately 50 percent for a number of economies. Hence, movements in food prices could have a significant impact on overall inflation in many of the region’s developing economies,” the report noted.

ADB also stated that the sudden spikes in food prices could more severely impact the poor, as they spend a larger fraction of their incomes on food.  Analysis by ADB showed that almost all economies with available data showed a positive food CPI growth in 2020.

Meanwhile, trends in non-food price inflation in 2020 were mixed and ranged from as low as –10.3 percent to as high as 18.6 percent by economy.