INFLATION SLIDES FURTHER!

There is a modest decrease in the cost of living amid ongoing disinflation

The unpredictability of the PepperCube Cost of Living Index (CLI) is evident as a minor shift is recorded this time around, following the drastic fall in July. The CLI remained somewhat stagnant in August, edging down from 85.39 to 84.51 – a difference of a mere 0.88 basis points. This is only the third occasion this year when the index has dropped to below 90, in addition to April and July.

However, the downward spiral of the Colombo Consumer Price Index (CCPI) continued its single digit trend for the second consecutive month. After a 19-month stint in double digits, the CCPI stabilised at 6.3 percent in July and dropped further to four percent in August.

Amid the continuing deceleration of inflation, sentiment among surveyed executives fluctuated somewhat in comparison to July.

Compared to the 97 percent who said the cost of living rose ‘highly’ or ‘moderately’ over the past year in July, five in 100 less (i.e. 92%) said so in August. Six percent feel the cost of living is the ‘same as before’ while two percent believe it to have ‘decreased.’

According to PepperCube’s latest poll in August, six percent more respondents (from 50% in July) anticipate the cost of living to ‘highly escalate.’ Concurrently, the same percentage as in the previous month (22%) now expect inflation to ‘moderately escalate.’

Meanwhile, a mere five percent foresee a ‘decrease’ in the cost of living with 15 percent expecting it to ‘remain the same.’

Seventy-eight percent of poll participants believe they ‘will not have a chance’ to purchase non-food items in the 12 months ahead – this is consistent with July’s findings.

Additionally, five percent are optimistic of having a ‘slight chance’ of purchasing non-food items while 12 percent anticipate their chances ‘will be the same’ as before.

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.