No relief in reality: Cost of living has doubled since 2021

The Central Bank of Sri Lanka (CBSL) has revealed that the cost of living for individuals in the country has doubled since 2021, despite a recent easing of inflationary pressures.

Addressing a press conference held at the CBSL headquarters, Assistant Governor Dr. Chandranath Amarasekara stated that while inflation has shown signs of decline in 2024, the overall cost of living remains significantly elevated compared to three years ago.

“Even when we consider personal income, it is evident that we are in a challenging situation due to elevated price levels and the increased cost of living. For instance, if we compare the years 2021 and 2024, the cost of living has effectively doubled,” Dr. Amarasekara noted.

He explained that although the rate of increase in living costs between 2023 and 2024 has been relatively modest, Sri Lankans are still grappling with the cumulative impact of price hikes that occurred in previous years, particularly during the economic crisis of 2022.

“The public is certainly experiencing some relief due to the reduction in inflation. However, when we compare current conditions with those of 2021, it’s clear that the cost of living is still at a level that is strongly felt by the people,” he said.

Dr. Amarasekara stressed the importance of economic growth in addressing this issue, highlighting the need to boost incomes across all sectors of the economy.

“To counter this, we require the kind of economic growth that can boost incomes, whether for public sector employees, private sector workers, or business owners,” he said, expressing hope that a gradual recovery will help restore real incomes lost in recent years.

Commenting on salary adjustments, particularly in the public sector, Dr. Amarasekara pointed out that many such increases are not linked to productivity, a factor he believes is crucial for sustainable development.

“Occasionally, we observed salary increments, especially within the public sector. However, these adjustments are often not linked to productivity. As economists, we believe that salary increments should be aligned with productivity improvements to ensure sustainable economic development,” he added.

The CBSL’s remarks come as the country continues to navigate the aftermath of a severe economic crisis, with efforts underway to stabilize public finances, restructure debt, and foster conditions for growth.