INFLATIONARY MILIEU AHEAD?

Both measures of the cost of living suggest that inflation will return soon

The PepperCube Cost of Living Index (CLI) recorded a second straight increase in May – albeit marginally – inching up by 0.6 points from 58.9 in April to 59.5.

Moreover, the Colombo Consumer Price Index (CCPI) remained in deflationary territory although the rate of deflation edged down slightly, mirroring the trend seen in April. In May, the CCPI recorded a year-on-year rate of deflation of -0.7 percent compared to -2.0 percent in the previous month.

Meanwhile, respondents’ perceptions about the cost of living remain largely unchanged from April. Seventy-eight percent believe the cost of living has ‘highly’ or ‘moderately escalated’ over the past 12 months, matching the previous month’s findings.

In May, 21 percent of survey participants said that costs either ‘stayed the same’ or ‘decreased,’ reflecting no change from the preceding month.

And expectations of a ‘highly escalating’ cost of living edged up with slightly over one in five (21%) of polled executives anticipating higher prices over the next 12 months, marking a one percentage point spike from April.

In the meantime, 19 percent foresee a ‘mode­rate escalation’ in their expenses – also up by one percentage point from April. And over four in 10 (44%) anticipate that their spending ‘will remain the same,’ marking a two point spike from the prior month’s findings.

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

A little over a half (51%) of the survey po­pulation say they ‘will not have a chance’ to purchase non-food items in the next 12 months – an increase of one percentage point from the preceding month.

And finally, a third (33%) believe their spending will ‘remain the same,’ marking a three point increase from April, while 12 percent remain 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.