THE COST OF LIVING

TAPERING COST PRESSURES  

Cost concerns soften as inflation holds steady and spending remains subdued

The PepperCube Cost of Living Index (CLI) fell by 3.1 points to 71.4 in September, reversing the previous month’s increase. The decline extends this year’s fluctuating pattern, although the index has remained in the 70 points range for four consecutive months. 

Meanwhile, inflation – as measured by the Colombo Consumer Price Index (CCPI) – held steady at August’s level (8%), sustaining its highest reading since June 2023, when it was last in double digits.

Slightly over eight in 10 (81%) respondents say the cost of living escalated ‘highly’ or ‘moderately’ over the past 12 months – down one percentage point from August. 

Seventeen percent believe that living costs have either ‘stayed the same’ or ‘decreased a little,’ a decline of four percentage points from the previous month.  

Looking ahead, less than a quarter (23%) of polled executives expect the cost of living to ‘highly escalate’ over the next 12 months – down five points from 28 percent in August. 

A further 36 percent anticipate a ‘moderate escalation’ in expenses – i.e. one point lower than in the preceding month. Meanwhile, over a quarter (27%) believe their spending ‘will remain the same,’ which is a four percentage point spike from the previous month. 

Only eight percent expect the cost of living to ‘decrease’ over the next 12 months – up one percentage point from August. 

As for their ability to purchase non-food items in the next 12 months, more than six in 10 (62%) respondents say they ‘will not have a chance’ – down four percent from the month prior (66%). 

And just under a quarter (24%) expect their spending on non-food items to ‘remain the same’ (down 3%) while only 10 percent are optimistic about their ability to afford such purchases, up one point from the previous month.

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.

– LMD