MIXED SIGNALS ON ‘INFLATION’

Cost perceptions remain unchanged amid the squeeze on purchasing power

The PepperCube Cost of Living Index (CLI) rose in February, following a slight decline in the previous month; it increased by 0.4 points from 58.2 in January to 58.6 a month later. On the other hand, the CLI stood at a gut-wrenching 92.5 only a year ago.

Meanwhile, the Colombo Consumer Price Index (CCPI) has continued to record disinflation with a marginal change from January. In February, the CCPI registered a year on year deflation rate of -4.2 percent compared to four percent in the previous month.

Respondents’ perceptions have remained largely unchanged from the previous month. Seventy-seven percent believe the cost of living has ‘highly’ or ‘moderately escalated’ over the past 12 months, reflecting a one percent decrease from January’s findings.

In February, 22 percent of poll participants said that costs either ‘stayed the same’ or ‘decreased’ – unchanged from the previous month.

And expectations of a ‘highly escalating’ cost of living saw a slight uptick with 20 percent of polled executives anticipating higher prices over the next 12 months – that’s a one percent increase from the previous month.

In the meantime, 18 percent of respondents expect a ‘moderate escalation’ in expenses, reflecting a one point increment from Janu­ary. Four in 10 (40%) anticipate their spending ‘will remain the same,’ which is consistent with the previous month’s findings.

Additionally, 16 percent believe the cost of living ‘will decrease’ over the next 12 months.

Nearly half (49%) of the survey participants say they ‘will not have a chance’ to purchase non-food items in the next 12 months – once again, a one point increase from the preceding month.

And 33 percent expect their spending to ‘remain the same,’ marking a two point rise from January, while 14 percent remain hopeful that they will be 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.