COST BURDEN BEGINS TO EASE

Notable declines in the cost of living indicators signal cautious optimism

The PepperCube Cost of Living Index (CLI) fell for the fifth consecutive month, hitting its lowest mark since July 2021, a trend that may continue in the months ahead.

With a sharp decline of 4.6 points from the previous month (82.1), the index dropped to 77.5 in September, marking its lowest level for the year thus far.

Moreover, the Colombo Consumer Price Index (CCPI) recorded disinflation with the index dropping to -0.5 percent year-on-year in September – down one percent from 0.5 percent in the previous month.

There’s been a notable shift in respondents’ perceptions in comparison with the preceding month. Eighty-nine percent said they believe the cost of living had ‘highly’ or ‘moderately escalated’ over the past 12 months, reflecting a five point drop from the month prior.

In contrast, 10 percent of the sample group believe that costs have either ‘stayed the same’ or ‘decreased’ in September, marking an increase from four percent in August.

September saw a decrease in expectations of a ‘highly escalating’ cost of living with around four in 10 (42%) of polled executives anticipating higher prices in the next 12 months – a 10 percent fall from the month prior.

And less than a third (28%) anticipate a ‘moderate escalation’ in their expenses, which is nine percentage points lower than in August. Meanwhile, 10 percent say a ‘decrease’ in their spending will ensue while 16 percent expect it to ‘stay the same.’

Sixty-eight percent of respondents remain pessimistic, believing they ‘will not have a chance’ to purchase non-food items in the next 12 months – an eight percentage point decrease from August.

Furthermore, 17 percent of respondents – a six point rise from the previous month – expect living expenses to ‘stay the same.’ And 13 percent are optimistic about their ability to purchase 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.