Rs. 20.6 b Cost of Living Allowance hike snubs 57 months of single digit inflation claim
Friday, 22 November 2013 06:36
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The Government’s, especially the Central Bank’s, assertion that inflation has remained at a single digit for near 60 months was seemingly snubbed by President and Finance Minister Mahinda Rajapaksa’s move to hike the Cost of Living (COL) Allowance for public servants.
Delivering good news, President in his 2014 Budget speech yesterday proposed to increase the Cost of Living Allowance to all public servants by Rs. 1,200 per month, from January 2014. “I also propose to increase the cost of living allowance to pensioners who retired before 2006 by Rs. 600 and by Rs. 400 to others. I make a request of private sector employers, who do not adjust salaries of employees in line with the Cost of Living Allowance, to suitably increase the wages of their employees,” the President said, amidst applause from Government benches.
The allocation in the Budget for this move is a staggering Rs. 20.6 billion.
In its November Monetary Policy Review, the Central Bank said inflation continued to remain at single digit levels in October 2013 for the 57th consecutive month since February 2009, while recent inflation (y-o-y) figures indicated that inflation volatility has smoothened.
“Going forward, the inflation outlook continues to remain benign, with subdued international commodity prices, reduced domestic supply side pressures and well contained demand driven inflationary pressures. In this background, according to current projections, inflation is expected to remain at mid-single digit levels throughout 2014 as well,” the Central Bank added.
The President said that between 2014 and 2016, inflation is expected to be 5-6%.
