A household in Colombo’s living expenses rose by Rs 18,942.21 year on year (YoY) last month (June), nonetheless decelerating for the third consecutive month, Census and Statistics Department’s (CSD’s) Friday’s (30 June) data showed.
Of this total Rs 18,942.21 YoY increase, the price of such a household’s food commodities bill increased by Rs 2,236.33 YoY to last month and the increase in their non-food commodity bill was upped by Rs 16,705.87 in absolute terms, statistics showed. The main YoY increase in such a family’s food bill last month was led by their sea fish bill increasing by Rs 1,176.32, milk powder increasing by Rs 821.40, fresh fruits led by plantains increasing by Rs 570.28 YoY to last month, chicken (Rs 581.84), their monthly tea leaves/dust bill increasing by Rs 482.41 YoY last month, coconuts by Rs 318.98 and their egg bill by Rs 200.42.
Some of the main YoY non- food drivers of inflation last month were such a household in Colombo’s electricity bill increasing by Rs 10,192.10 YoY, train fare increasing by Rs 87.62 YoY to last month, eating from out (Rs 1,500.15), clothing and footwear (Rs 1,491.52), health (Rs 875.77), ‘furnishing, household equipment and routine household maintenance’ (Rs 859.92), education costs up Rs 616.55 YoY, ‘recreation and culture’ (Rs 788.58), communication expenses (Rs 732.34) and ‘alcohol, tobacco and narcotics’ bill up Rs 484.02.
Nonetheless, last month was the first time after a year that the YoY increase in a household’s living expenses has been under Rs 20,000. Prior to last month, the last time that a household’s YoY rise in living expenses was under Rs 20,000 was in June 2022 with a value increase of Rs 15,087.10.
Meanwhile, Colombo inflation decelerated for the ninth consecutive month to last month after a 168 month hiatus to 12 per cent YoY aided by food inflation decelerating by 4.1 per cent also for the ninth consecutive month to last and non-food inflation decelerating for the third consecutive month to 16.2 per cent.
Meanwhile, last month was the first time after 15 months that the YoY rise in Colombo inflation was under 20 per cent. The last time this phenomenon took place was in March 2022 with a figure of 18.8 per cent.
Prior to last month, the last time Colombo inflation decelerated for at least nine consecutive months was 168 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 19 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 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, 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.