Upsurge in cost of living Celebrating festive season and welcoming the new year 

2016-12-31

As the festive season brings to a close another eventful year many claim the cost of living to be ‘burdensome’, and ‘overwhelmingly high’. Economics experts point out that the rate of inflation has risen resulting in the rise of the cost of living. The Dailymirror spoke to a wide cross section of society - beggars, coolie labourers, traders, businessmen, managers, and engineers - on what they felt about the cost of living. 

 Accordingly we found that sales have dropped and the general public were unable to manage their household budget due to the rising cost of living. While some expressed hope for long term prosperity envisioned through the yahapalanaya government, there seemed to be a growing dissent against the current government as well due to oppressive taxes which have made the cost of living unbearable to many. 

  “The annual average inflation increased from 0.9% in 2015 to around 4% in 2016, increasing the cost of living of the people.”Vincent Mervin Fernando - Former Director of the Central Bank of Sri Lanka     “Colombo Consumer Price Index (CCPI) and the new National Consumer Price Index (NCPI) are the two main price indices used to measure the cost of living in Sri Lanka. The rate of inflation for the years 2014, 2015, 2016 and 2017 are 3.3%, 0.9%, 4.0% and 4.0% respectively.” 

  He further added, “Sri Lanka’s high inflation was an issue of concern when considering the cost of living for many years, particularly since the liberalization of the economy in Lanka during 1977. Sri Lanka’s inflation was on average around 11.2% for the period 1978-2008. This high rate of inflation has reduced to a mid-single digit average around 5.9% since 2009 to 2014.”  

 Speaking of the low inflation rate seen last year, he said, “The year 2015 witnessed a generous package of welfare improving measures being implemented across various sectors of the economy encompassing a wider range of socio-economic strata. 

 Most of such measures were fashioned in the newly formed government’s ‘100-Day Programme’ which was intended to provide immediate relief for people, among other objectives. 

 Excess taxes levied on 10 essential food items including sugar, milk powder, wheat flour, chillies etc. were lowered immediately, thereby reducing the market prices substantially. The price of a cylinder was reduced on two occasions while the increase of total allowances paid to public sector employees stood at Rs.10,000. Such relief measures generated a substantial amount of savings for people to meet their needs. As a result the average inflation decreased to 0.9% in December 2015 from 3.3%, which was the lowest percentage ever recorded since 1977.”

Further examining the sudden rise in inflation rate and subsequent rise in the cost of living he added, “However the annual average inflation increased from 0.9% in 2015 to around 4% in 2016, increasing the cost of living of the people. This was mainly due to the increase of expenditure value of food items in rice, coconut, vegetables, potatoes, lime, big onions, tea leaves, dhal, coconut oil, red onions etc. However price decreases were reported for fresh fish, papaw, chicken, banana, mangoes, eggs and green chillies. Further very small increases in expenditure value were reported for groups of Transport and Restaurant and Hotels. The expenditure value increases in Health, Communication and Alcoholic beverages, Tobacco and Narcotics were a result of the implementation of the new Value Added Tax (VAT) rates with effect from November 1. However in conclusion, the CoL in Sri Lanka is 56.7% lower than in the United States, European and some other Asian countries.”

Negative trends in society linked with cost of living  - Prof. Daya Amarasekara, University of Peradeniya “Social class can be interpreted as a social group experiencing similar economy and consumerism. Changes in social status, norms and values could be inspected within this group and all these changes are hard-wired with increasing cost of living. Imposing new taxes are a prominent cause for increased cost of living and that has affected all the social classes, namely the higher middle class, middle class and lower class. Poverty, prostitution and anti social activities are all connected with the struggle of life. People tend to be attracted to earn in secretive ways due to the high cost of living.” he explained. 

“Exploitation of child labour is also increasing, because school leavers crushed by economic difficulties try to earn money without furthering their studies. Child labourers, flower vendors and candlestick sellers we see during rush hour traffic are some examples of child exploitation. The sociologist Frantz Fanon has pointed out a group of urban orphans called urban loompon group.  They are generally jobless, lives day to day by doing both good and bad. Drug peddling, vehicles theft, printing of counterfeit currency are some of these illegal activities they are engaged in. There is another group of people who leave the country with disappointment and determined not to return. There’s also a very negative trend of elderly parents being left alone by their children employed in foreign countries. Or after marriage they settle far from their parents; children and parents have weak relationships. As a result, the elderly are rendered helpless and lonely.” 

Professor  

Amarasekara opined.