Sri Lanka's cost of living is significantly lower than in the United States, particularly in housing, utilities, and local transportation. Basic expenses such as groceries, healthcare, and education are also more affordable compared to Western standards. However, recent economic challenges, including inflation and currency depreciation, have raised living costs in 2023.

The affordability of Sri Lanka stems from a lower cost of housing and utilities. Rent for a one-bedroom apartment in Colombo averages $300–$500 per month, far below U.S. averages of $1,500–$2,500. Utilities like electricity and water cost approximately $20–$30 monthly, compared to $100–$150 in the U.S. Groceries, such as rice, lentils, and vegetables, remain relatively inexpensive due to local production, though imported goods have become pricier amid currency weakness. Transportation is affordable, with public buses and trains costing $0.50–$2 per ride, while fuel prices (though volatile) are lower than global averages.

Inflation and currency depreciation are key drivers of recent cost increases. Sri Lanka’s inflation rate hit 15.2% in 2023, per the Central Bank of Sri Lanka, eroding purchasing power. The Sri Lankan rupee lost 40% against the U.S. dollar between 2021 and 2023, raising import costs. For example, a U.S. gallon of gasoline costs $5.50, while in Sri Lanka it is $3.50, but currency fluctuations have narrowed this gap. The World Bank’s 2023 purchasing power parity (PPP) index shows Sri Lanka’s median income is 30% of the U.S. median, yet living costs are 60% lower. Despite challenges, Sri Lanka remains a budget-friendly destination for expats and tourists compared to the U.S., where housing, healthcare, and education dominate expenses.