Perceptions remain cautious despite a historic fall in the official rate of inflation

The PepperCube Cost of Living Index (CLI) registered a second consecutive monthly decline, marking only the second such fall since October of last year. The index contracted marginally by 0.6 percent, falling from 92.5 in February to 91.9 in March.

Moreover, the Colombo Consumer Price Index (CCPI), which saw inflation plummet from 5.9 percent in February to 0.9 percent a month later, registered a historic change. This is the lowest rate of inflation recorded since the third quarter of 2015 when it stood at 1.1 percent. The unexpected decrease surpassed the projections of the Central Bank of Sri Lanka.

In the latest poll conducted by PepperCube, a majority of respondents (97%) perceive the cost of living to have increased either ‘highly’ or ‘moderately’ over the past 12 months – a percentage that is consistent with the pre­vious month’s findings.

Meanwhile, only two percent of surveyed respondents believe that costs remained unchanged, marking a one percentage point decrease compared to February.

Looking ahead to the next 12 months, expectations regarding a ‘highly escalating’ cost of living remained steady in March with around two-thirds (67%) of executives expressing this sentiment, which is consistent with February’s  outcome.

Furthermore, over a fifth (21%) of respondents anticipate a ‘moderate escalation,’ mirroring the count from the previous month. Seven percent foresee no change in costs while three percent hold an optimistic view that they will ‘decrease a little.’

However, the majority of poll participants (86%) believe they ‘will not have a chance’ to purchase non-food items in the next 12 months – a fall of two percentage points compared to the previous poll.

And 10 percent expect no change in the cost of living while only one percent have a slight hope 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.