A household in Colombo’s living expenses rose by 35,501.19 YoY last month, nonetheless decelerating for the second consecutive month, Census and Statistics Department’s (CSD’s) today’s data showed.
Of this total Rs 35,501.19 YoY increase, the price of such a household’s food commodities bill increased by Rs 9,904 YoY to last month and the increase in their non-food commodity bill increased by Rs 25,597.18 in absolute terms, statistics further showed.
The main, YoY increase in such a family’s food bill last month was led by their sea fish bill increasing by Rs 1,787.81, milk powder bill increasing by Rs 1,645.67, fresh fruits bill led by plantains increasing by Rs 937.28 YoY to last month, chicken (Rs 891.45) and their bread bill by Rs 360.63, respectively.
Some of the main YoY non- food drivers of inflation last month were such a household in Colombo’s electricity bill by increasing by Rs 10,192.10 YoY, transport costs increasing by Rs 3,474.83 YoY to last month, eating from out (Rs 2,657.01), clothing and footwear (Rs 1,623.34), health (Rs 1,374.56), ‘furnishing, household equipment and routine household maintenance’ (Rs 1,235.97), education costs up Rs 1,197.64 YoY, ‘recreation and culture’ (Rs 899.65), communication expenses (Rs 823.08) and ‘alcohol, tobacco and narcotics’ (Rs 640.99) respectively.
Meanwhile, Colombo inflation decelerated for the eighth consecutive month to last month after a 167 month hiatus to 25.2 per cent YoY aided by food inflation decelerating by 21.50 per cent for the eighth consecutive month to last month and non-food inflation decelerating for the second consecutive month to 27 per cent.
Prior to last month, the last time Colombo inflation decelerated for at least eight consecutive months was 167 months ago, where for a total of 12 consecutive months, ie from July 2008 to June 2009, YoY inflation decelerated from 26.6 per cent to 0.9 per cent, aided by the Global Financial Crisis and followed by the Great Recession, resulting in commodity prices led by oil falling to near historic lows. Meanwhile, inflation in June 2008 was 28.2 per cent.
Nonetheless, Colombo inflation has been in double digits for 18 consecutive months to last month. Prior to last month, the last time Colombo inflation was in double digits for at least 18 consecutive months was more than 14 years ago, where Colombo inflation was in double digits for 32 consecutive months, from June 2006 to January 2009.
However, the current record high inflationary levels are due to multiple causes led by excessive money printing and record high rupee depreciation in the context that Sri Lanka is an import dependent economy, made worse by Sri Lanka stopping repaying its external debt in April 2022 due to a US dollar shortage, thereby closing the access to international markets for the country.
The dollar shortage was caused by President Mahinda Rajapaksa who went on a foreign commercialborrowing spree when in power, resulting in Sri Lanka’s foreign commercial debt whic h was under four per cent of all foreign debt in 2005, ie the year he assumed power, rising to over 50 per cent at the height of Rajapaksa’s power in 2012 and staying that way since. Consequently Sri Lanka was unable to service its foreign debt, leading to a foreign debt servicing default in April 2022.