BIZ PEOPLE ON TENTERHOOKS

There’s anxiety despite the easing cost of living and tapering inflation

Expectations of a drop in the PepperCube Cost of Living Index (CLI) were short-lived: the barometer recorded a marginal increase of 1.7 basis points to 91.4 in May – from 89.7 in April.

So the CLI has reverted to roughly where it was in March. Its highest point (95.8) in the recent past was in December.

On the other hand, the Colombo Consumer Price Index (CCPI) saw yet another decline with a 10.1 percent drop in May, which had inflation trending down from 35.3 percent in April to 25.2 percent.

There’s evidence therefore, that despite the downtrend in inflation, the cost of living remains a burden on the public.

The CCPI has remained in the double digits since December 2021 and expectations are high that year-on-year inflation will reduce to single digits before the end of this year.

Meanwhile, a whopping 96 percent of polled executives (a percentage point higher than in April) say that the cost of living in the preceding 12 months escalated ‘highly’ or ‘moderately’ in May. Similar sentiments were expressed in May last year at the peak of the economic crisis.

Eighty-seven percent of survey participants believe that the cost of living will escalate ‘highly’ or ‘moderately’ in the next 12 months – which is an increase of one percentage point from the month prior. Only four percent of respondents were hopeful of a drop in the cost of living.

Furthermore, 58 percent are of the opinion that they ‘will not have a chance at all’ to purchase goods and services in the non-food category or be able to save over the next 12 months while the same sentiment was expressed in May last year.

Four percent are hopeful that non-food category purchases will be a possibility.

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