COLOMBO (AFP) – Sri Lanka raised fuel prices by up to 7.5 percent in a bid to offset higher crude oil import costs, the government said.

Gasoline prices on Saturday increased by 10 rupees to 143 rupees (1.3 dollars) a litre while diesel, which is widely used by public transport, was raised 3.5 percent to 93 rupees.

A net oil importer, Sri Lanka sources much of its petroleum products from Iran, Saudi Arabia and Malaysia and the increasing international prices forced the latest retail price hike, an official of the Petroleum Corporation said.

The rise in fuel prices is expected to impact on inflation which climbed to 8.6 percent in March, the highest in more than two years, due to shortages of food following massive flooding earlier in the year.

The Central Bank of Sri Lanka has forecast the island nation's inflation rate will be between six and seven percent by the end of 2011.