THE COST OF LIVING

COST SENTIMENT SHIFTS GEAR

The cost of living index registers a sharp shift with negativity holding sway

The PepperCube Cost of Living Index (CLI) saw a notable increase in July, rising to 69.9 – a major 10.4 point shift from June – likely indicating a turnaround in consumer sentiment and changes in key cost drivers.

Meanwhile, the Colombo Consumer Price Index (CCPI) remained in deflationary territory, recording a year-on-year rate of deflation of 0.3 percent in July compared to 0.6 percent in the previous month.

Respondents’ perceptions about the cost of living showed signs of negativity compared to the previous month. Eighty-five percent believe the cost of living has ‘highly’ or ‘moderately escalated’ over the past 12 months – an increase of six percentage points from June’s findings.

In July, slightly over one in 10 (13%) of survey participants said that costs either ‘stayed the same’ or ‘decreased’ – that’s a notable drop of seven points from the preceding month.

And expectations of a ‘highly escalating’ cost of living edged up with 35 percent of polled executives anticipating higher prices over the next 12 months – this represents a 15 percentage point increase from June.

Twenty percent of respondents expect a ‘moderate escalation’ in their expenses – unchanged from the month prior. And slightly over a quarter (26%) anticipate their spending ‘will remain the same,’ which is a decline of 15 points from June.

Additionally, 12 percent believe the cost of living ‘will decrease’ over the next 12 months – a count that has remained steady for the third consecutive month.

Notably, well over half (57%) of the survey population say they ‘will not have a chance’ to purchase non-food items in the next 12 months, signalling an increase of nine percentage points.

And finally, nearly a quarter (24%) expect their spending to ‘remain the same,’ reflecting an 11 point drop, while 14 percent are optimistic about being able to afford non-food products – that’s two points higher than in June.

– LMD

FOOTNOTE An index based on a monthly survey, the CLI aims to measure and understand perceptions regarding the cost of living as opposed to reported or official inflation.