DIVERGING TRENDS PERSIST

Contrasting cost of living indicators paint a mixed picture of ‘inflation’

The PepperCube Cost of Living Index (CLI) fell for the third consecutive month, to register its lowest level since June 2021 – that was at the peak of the pandemic.

Marking a marginal decrease of 0.9 points from the previous month, the index recorded 82.7 in July. This represents the lowest reading for the year to date.

On the other hand, the Colombo Consumer Price Index (CCPI) rose to 2.4 percent year-on-year in July, up from 1.7 percent in the month prior.

Once again, there was a shift in perceptions with 93 percent of respondents saying that the cost of living over the past 12 months has increased either ‘highly’ or ‘moderately’ – a rise of two percentage points from the previous month.

In contrast, only five percent of the group felt that costs ‘stayed the same’ or ‘decreased’ in July, down from eight percent in June.

Looking ahead to the next 12 months, expectations of a ‘highly escalating’ cost of living eased in July with just over half (52%) of surveyed executives anticipating a spike. This marks a seven percent decrease from the previous month.

Additionally, just over a fifth (21%) of participants foresee a ‘moderate escalation’ in their expenses, marking a three percentage point increase.

And 15 percent expect their expenditure to ‘stay the same’ while six percent anticipate a change.

Despite the shifts in expectations, 75 percent of respondents are still pessimistic, believing they ‘will not have a chance’ to buy non-food products in the next 12 months. This represents a one percentage point increase compared to June.

Moreover, 11 percent anticipate that living expenses will stay the same while 12 percent are optimistic about being able to afford non-food products.

 – 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.