INFLATION CONUNDRUM GROWS

There’s heightened anxiety in corporate corridors over high operating costs

The PepperCube Cost of Living Index (CLI) continued to register a notable trend with a spike in January in comparison to the preceding month. The index shot up from 90.6 in December to 94.6 in January, reflecting a four basis point increase.

Indeed, the CLI’s erratic outlook is evident – which has been the case for the past several months.

It’s noteworthy that the Colombo Consumer Price Index (CCPI) also registered an uptick (a 2.4% increase) and continued to rise in single digits for the seventh consecutive month: the CCPI rose from four percent in December to 6.4 percent a month later.

The continual rise in inflation, despite remaining within the single digit range since July last year, has led to doubts among surveyed executives, particularly concerning the cost of living and conducting business.

In the latest poll conducted by PepperCube, a staggering 99 percent of respondents said that the cost of living has escalated either ‘highly’ or ‘moderately’ over the past 12 months – a four percent increment from the previous month. Only one percent said it remained the ‘same as before.’

Expectations regarding an escalating cost of living in the next 12 months also saw an uptick with nearly three-quarters (73%) of executives expressing this sentiment, marking a four percent rise from January.

Meanwhile, a fifth (20%) anticipate a ‘moderate’ increase in costs; five percent foresee it remaining unchanged; and one percent are optimistic that there will be a decrease.

In addition, nearly nine in 10 (88%) respondents remain negative, believing they ‘will not have a chance’ to purchase non-food items in the next 12 months. Only six percent anticipate no change in the cost of living while three percent hope for a ‘slight chance’ of being able 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