Sri Lanka faces renewed food inflation pressures as global fertiliser prices surge sharply amid the ongoing Middle East conflict, the Asian Development Bank has warned.
Speaking at the launch of the Asian Development Outlook – April 2026 in Colombo on Friday, ADB economist Liliya Aleksanyan said urea prices have climbed more than 50 per cent while ammonia prices have risen nearly 40 per cent since late February. Both are critical inputs for agricultural production.
The sharp cost escalation is expected to raise production expenses across Sri Lanka’s farming sector, with potential impacts on crop yields if the upward trend continues.
“This, in turn, could push up domestic food prices and add to inflationary pressures later in the year,” Aleksanyan cautioned.
She added that Sri Lanka remains vulnerable to external shocks as it continues rebuilding economic buffers following recent crises. Beyond fertilisers, she pointed to elevated energy prices, tighter financial conditions and trade uncertainties as additional risk channels.
Rising agricultural input costs represent a delayed transmission channel through which global shocks feed into domestic inflation, she noted. Sustained increases in fertiliser prices could pose a significant challenge to food price stability and broader economic resilience.
The warning comes as the government has already allocated Rs. 7.1 billion for a fertiliser subsidy shield to protect farmers, while the plantation sector has flagged supply disruption risks linked to the Hormuz Strait crisis. The ADB separately projected Sri Lanka’s GDP growth at 4 per cent for 2026, down from earlier estimates, with the Middle East conflict identified as the primary downside risk.
