THE ‘INFLATION’ CONUNDRUM

Disinflation is trending while the cost of living uptick continues unabated!

The volatility of the PepperCube Cost of Living Index (CLI) is apparent once again with September bringing about a noteworthy shift compared to the previous month. The CLI rose to 89.62 basis points from 84.51 in August – an increase of 5.11 points. This uptick marks a reversal of the two month downward trend in July.

Despite this upturn however, the CLI has seen a decline overall; it’s been consistently above the 90 point mark since March 2022 – for 13 consecutive months including May and June this year.

Meanwhile, the Colombo Consumer Price Index (CCPI) continues to record single digits (for the third consecutive month), dropping further from four percent to 1.3 percent in September.

Notwithstanding the ongoing deceleration of inflation, sentiment among surveyed executives has turned negative in comparison to August.

Ninety-six percent feel the cost of living rose ‘highly’ or ‘moderately’ over the 12 months in September while four percent less said so in the preceding month. Four percent believe the cost of living is the ‘same as before.’

According to PepperCube’s latest poll, 59 percent of respondents (up from 56% in August) expect the cost of living to ‘highly escalate’ while one in four (25%) say inflation will ‘moderately escalate.’

Meanwhile, one in 10 of those spoken to feel the cost of living ‘will remain the same’ with four percent hopeful it will ‘decrease.’

Eighty-three percent of poll participants say they ‘will not have a chance’ to purchase non-food items in the 12 months ahead – an increase of five percent from August.

Nine percent expect the cost of living landscape to remain the same; and four percent are hopeful of having a ‘slight chance’ to purchase non-food items.

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