Why Groceries are Slowly Costing You More

On the streets of Male’, the air is heavy with humidity and the promise of changing monsoons. But for many residents, another kind of pressure lingers; the shock at the corner shop checkout when the bill once again creeps higher than expected. 

A kilo of onion now costs more than it did last month, apples feel like a luxury. Even the staples - fish and coconut that form the backbone of a Maldivian meal have become pricier and a little bit harder to afford.

This steady, relentless climb in prices is not a random and isolated incident. It is rooted in the country’s most ingrained economic issues; the shortage of foreign currency- or more specifically, the USD.

In a nation that imports nearly everything that it consumes, from the fuel that keeps the lights on to the food on its tables- the cost and availability of USD have become the biggest factor shaping everyday lives.

This is not only the global inflation trickling down. It is the product of the Maldives economic structure and its dependence on foreign currency causing an imbalance that has left households, businesses and policymakers in a squeeze.

Tourism is the Maldives lifeline; what has kept the economy from plummeting after the Covid-19 lockdown. The USD that tourists spend on resorts, guesthouses, liveaboards and excursion trips keep the economy pulsing. In return, the country exports little; mostly tuna and other processed fish products.

In July 2025, imports stood at MVR 4.5 billion, while exports amounted to just MVR 210 million, according to Maldives Customs Service. Food was the second-largest import category after fuel, underlining the nation’s reliance on foreign produce.

This creates a fundamental problem. Importers; from major wholesalers to corner shop owners, need USD to pay international suppliers. Transactions cannot be made in Maldivian Rufiyaa (MVR). In theory, the banking system should supply dollars at the fixed official rate of MVR 15.42 to the dollar. In practice, demand far outstrips supply.

The shortage has given rise to a parallel or “black” market where USD trades at up to MVR 20. This is almost 25 percent higher than the official exchange rate. For an importer, that difference quickly becomes crippling.

A shipment worth USD 10,000 that should cost an importer MVR 154,200 at the official exchange rate can end up costing nearly MVR 195,000 if banks are unable to release USD quickly. In such cases, especially when dealing with perishable goods, the importers are often forced into the parallel market, where rates are far higher.

The extra MVR 40,800 is a hidden tax, spread into the wholesale price and eventually passed on to the final consumer.

The squeeze is driven by a series of structural and financial pressures. Imports continue to dwarf exports, creating a trade deficit that leaves the economy reliant on external inflows. Even tourism, the country’s biggest source of foreign currency, is not able to fully offset the gap, as much of the tourism related revenue leaks out of the system when companies keep earnings abroad, rather than channeling them through local banks. On top of this, the government's debt repayment efforts have further tightened access to USD in the market.

Small and medium sized businesses are hit hardest, being more exposed to the volatile black market than larger corporations with foreign currency reserves. The result is a vicious cycle; the dollar shortage driving up parallel market rates, which in turn makes it more expensive for businesses to obtain dollars.

Earlier this year, Bank of Maldives increased USD allocations for businesses requesting foreign currency for international transfers to 30-50 percent of their request, up from 5-10 percent the previous year. This has been a welcome move aimed at easing the dollar shortage in the country.

For consumers, the squeeze is felt in their shopping baskets.

Speaking to The Edition, one consumer said that rising food prices have left them cutting corners and rethinking their shopping habits.

“It’s a small change in prices every few weeks, but it adds up,” said a mother of three living in Male’.

“Food bought for the kids’ interval is more expensive than before. We buy in smaller quantities now, compared to before. The bill keeps increasing every time we go shopping, even if we buy the same items.”

What began as a foreign currency shortage filters through to every household budget. It reduces the purchasing power of the Maldivian Rufiyya (MVR) and widens the gap between fixed incomes and rising costs.

Earlier this month, Economic Minister Mohamed Saeed, assured that fruit and vegetable prices in the Maldives would fall from 15 October. State Trading Organisation (STO) is preparing to import and sell 23 varieties of food, including fruit and vegetables, to tackle rising market prices. Saeed added that if the price of any of these 23 items increases before then, STO will bring in additional stock.

Maldives Monetary Authority (MMA) have taken several measures to strengthen reserves by tightening regulations on how tourism industry businesses handle foreign currency, aiming to push more USD through official banks.

According to the regulation, resorts are required to deposit USD 500 per tourist in a local bank, while guesthouses must deposit USD 25 per tourist. The Foreign Exchange Act also offers an alternative for Category A resorts, allowing them to deposit either USD 500 per tourist or 20 percent of their gross monthly income. Category B guesthouses can choose to deposit either USD 25 per tourist or 20 percent of their monthly income.

The government has also introduced fiscal reforms aimed at decreasing state expenditure, while international partners have stepped in to provide further assistance. In May this year, India rolled over USD 50 million in treasury bills to ease fiscal pressure and strengthen economic resilience.

Yet, despite these measures, the black market thrives and prices continue to rise.

There is no quick fix for an economy built on imports relying heavily on one sector. Diversifying exports, boosting local agriculture and fisheries and building stronger reserves will take time.

For now, people live with the hidden tax of the dollar shortage, paid not in policy papers or budget lines, but in smaller shopping bags and thinner wallets- felt most acutely at market stalls, corner shops and kitchen tables.