ENDURING INFLATION IMPACT

Business people’s anxiety over persistent inflation continues to raise alarm

The PepperCube Cost of Living Index (CLI) registered a marginal uptick – an almost negligible increase in December compared to the preceding month. The index inched up by 0.2 basis points, rising from November’s 90.4 to 90.6.

So the fluctuating trend of the CLI is apparent, much like the pattern observed throughout 2023.

Similarly, the Colombo Consumer Price Index (CCPI) witnessed a 0.6 point increase while sustaining its single digit trajectory for the sixth consecutive month. The CCPI rose from 3.4 percent to four percent in December, which is within the target of inflation stabilising at five percent this year.

Despite the rapid deceleration of inflation since June – in line with anticipated trends by financial regulators – surveyed executives remain vigilant about the cost of living and doing business as they perceive the situation not to have improved.

In the latest poll conducted by PepperCube, 95 percent of respondents assert that the cost of living has increased either ‘highly’ or ‘moderately’ over the past 12 months – that’s a two percent decrease from the previous month.

There was an increase in expectations of the cost of living ‘highly escalating’ with nearly seven in 10 (69%) of executives saying so, which reflects an increase of eight from the previous month. And less than a fifth (18%) expect it to ‘moderately escalate.’ In addition, nine percent believe it will ‘remain the same’ and two percent are optimistic of a ‘decrease.’

Meanwhile, 86 percent of respondents hold pessimistic expectations, believing they ‘will not have a chance’ to purchase non-food items in the next 12 months.

And nine percent expect the cost of living to remain unchanged and two percent are hopeful of a ‘slight chance’ of being able to purchase non-food items.

– 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.