Highlights
Spikes and instability in prices are posing threats to market functionality in Sri Lanka. Almost all markets are reporting concerns around rising and/or unstable prices. These high prices threaten to further impact vulnerable households’ food accessibility and are pushing people to adopt to food coping strategies, such as reducing number of meals and purchasing less expensive items. Volatile and unpredictable prices can undermine the economic decision-making for producers and importers.
Other than prices, markets are relatively functional. At an aggregate level, Sri Lanka’s markets currently have a wide range of products, adequate physical availability of essential goods, a resilient supply chain and sufficient levels of hygiene and cleanliness. While there remain variations from market to market, with the exception of prices, most market functionality dimensions are showing lower risk levels for cash-based transfers.
Several mitigation measures should be put in place to safeguard against price-related risks for cash-based transfers. These include continuing to strengthen market monitoring, and adapting to price fluctuations, such as by calculating the minimum expenditure basket, and adjusting the transfer values as needed.
Overall market functionality remains conducive to the use of cash-based transfers, while mitigation measures are essential to keep this from deteriorating. However, markets with especially high levels of risk associated with the use of cash-based transfers must remain flexible to shift to mixed modalities and/or in-kind food assistance.