The island nation is in the midst of its worst economic crisis since independence, with dire shortages leading to anti-government protests that last month turned violent.

The government has now scrapped licensing for some 369 items and replaced it with sharply higher taxes, officials said.

Key targets will be luxury items out of reach for most Sri Lankans but widely used by hotels catering to foreign tourists, a key source of revenue.

From June 1, foreign cheese and yogurt attract a new tax of 2,000 rupees (US$5.50) for a kilogram. Duty on chocolates was raised by 200 percent.

Additional levies also apply to imported fruit while duties on all alcoholic drinks and on electronic appliances were doubled.

The government had imposed a wide import ban in March 2020 in a bid to conserve its foreign exchange reserves but had gradually moved toward fee-based import licensing.

However, the government is now lifting the licensing regime in favor of the taxes. Bans on the import of vehicles, spare parts and machinery remain.

Although some of the import restrictions have been relaxed, importers are unable to find dollars to pay for them as commercial banks have run out of foreign exchange.

The country is facing acute shortages of fuel, food and medicines because of the foreign exchange crisis, while it is also struggling with lengthy electricity blackouts and runaway inflation.

Sri Lanka saw its highest inflation on record for the eighth consecutive month in May, official data showed on Wednesday, as the island nation grapples with its worst-ever economic crisis.

The Colombo Consumer Price Index (CCPI) rose 39.1 percent year-on-year last month, up from 29.8 percent in April, according to the statistics department.

Food inflation in Colombo came in at 57.4 percent, up from 46.6 percent in April. 

The price increases in May were yet to fully capture the sharp increases in fuel, one of the many vital commodities in scarce supply across the country.

Private economists say consumer prices are rising even faster than official records show, with one John Hopkins University analyst tracking March inflation at 133 percent – more than six times the official figure.

Sri Lanka's import-dependent economy has been hammered by a critical foreign currency shortage, leading to months of acute shortages of food, medicines and other essentials. 

The country has asked for a bailout from the International Monetary Fund after defaulting on its $51 billion foreign debt.

Faced with a huge cash crunch, the government on Tuesday raised taxes across the board by rolling back cuts ordered by President Gotabaya Rajapaksa in November 2019.

Weeks of protests outside the president's seafront office have demanded his resignation over government mismanagement of the crisis.

After last month's violence in which at least nine people died, Mahinda Rajapaksa quit as prime minister, but his brother Gotabaya Rajapaksa remains president.