THE COST OF LIVING
THE COST CRUNCH DEEPENS
Rising costs weigh on spending prospects as both key indicators climb
The PepperCube Cost of Living Index (CLI) continues to rise – for the third consecutive month – gaining 3.5 points from 69.9 in May to 73.4 a month later. This marked a resumption of the upward trend witnessed briefly in March and is only the second time since September 2024 that the index has entered the 70 point range.
Meanwhile, the Colombo Consumer Price Index (CCPI) maintained its upward trajectory with year-on-year inflation increasing by 1.3 percentage points to 6.8 percent in June – this marks the first time the CCPI has breached six percent since January 2024.
More than eight in 10 (84%) of those surveyed say the cost of living escalated ‘highly’ or ‘moderately’ over the past 12 months – up three percentage points from May (81%).
Fourteen percent believe that living costs have either ‘stayed the same’ or ‘decreased a little,’ compared with 16 percent in the previous month.
Looking ahead, 27 percent of polled executives expect the cost of living to ‘highly escalate’ over the next 12 months – a two percentage point decline from May (29%).
A further 36 percent anticipate a ‘moderate escalation’ in expenses, up two points from the preceding month, while over a quarter (28%) believe their spending ‘will remain the same’ – reflecting a three point spike.
Only four percent expect the cost of living to ‘decrease’ over the next 12 months – down three percentage points from May.
When asked about their ability to purchase non-food items in the next 12 months, nearly two-thirds (64%) say they ‘will not have a chance’ – that’s a nine point increase from the month prior.
And a quarter (25%) expect their spending on non-food items to ‘remain the same’ (down 6%) while only seven percent remain optimistic about their ability to afford such purchases – a three point decline from May.
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.
– LMD
