A family in Colombo’s living expenses rose by a record Rs 60,036.48 year on year (YoY) to this month (March 2023) beating the previous record of Rs 58,487.04 established only in the previous month (February 2023), Census and Statistics Department (CSD) data released today showed.
Of this (this month’s) increase, the price of such a family’s food commodities bill increased by Rs 17,788.86 YoY to this month and their non-food commodity bill by Rs 42,247.62, YoY, statistics further showed. The main, YoY increase in such a family’s food bill last this month was their milk powder bill increasing by an average Rs 3,153.44, rice bill (Rs 1,377.27), sea fish bill by Rs 1,356.83, fresh fruits bill led by plantains (Rs 1,272.78), chicken (Rs 1,029.83) and bread bill by Rs 1,002.92, respectively.
Some of the main YoY non- food drivers of inflation this month were such a family in Colombo’s average transport costs increasing by Rs 11,864.89 YoY last month, electricity bill by (Rs 10,192.10), clothing and footwear (Rs 2,048.82), ‘furnishing, household equipment and routine household maintenance’ (Rs 1,964.78)-including cost of bulbs and washing soaps, health (Rs 1,926.11), education (Rs 1,850.04), ‘recreation and culture including to buy newspapers and books’ (Rs 1,110.63), communication expenses (Rs 826.71), ‘alcohol, tobacco and narcotics’ (Rs 823.08) and the purchase of toilet soaps (Rs 616.97) respectively.
Meanwhile, Colombo inflation decelerated for the sixth consecutive month to this month after a 165 month hiatus to 50.3 per cent YoY aided by food inflation decelerating to 47.6 per cent for the sixth consecutive month to this month, though non-food inflation accelerated for the second consecutive month to this month, this time to 51.7 per cent
Prior to this month, the last time Colombo inflation decelerated for at least six consecutive months was 165 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 16 consecutive months to this month. Prior to this month, the last time Colombo inflation was in double digits for at least 16 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 commercial borrowing spree when in power, resulting in Sri Lanka’s foreign commercial debt which was under four per cent of all foreign debt in 2005, 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.
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