Rising Cost of Living

Topics: Sri Lanka, Peak oil, Price, Cost, 1973 oil crisis, Economics / Pages: 3 (510 words) / Published: Aug 26th, 2011
Today, rising cost of living is an everyday theme. In the bus, at the office and at the market, almost all conversations revolve around the rising prices. Increase of general price levels is generally known as ‘inflation’. The common man feels the inflation when the prices of his consumer goods go up. He feels the rising cost of living with each increase of bus fare, bread prices and utility bill prices. The causes a lot of social problems which at its extreme form, cause social unrest.

Over the years, our wants and needs have increased. In the early days, the father of a family would be the sole breadwinner and with his earnings, his family will build a house, educate the children and save for the future. As the economy developed our wants and needs have got complicated. In food, clothes and almost all consumer goods, there is a wide variety and greater choice. With variety and choice, comes the price to pay.

Cost of living can rise due to various reasons. Prices of vegetables depend heavily on supply side shocks. Too much or too little rain could raise the prices of vegetables. Rain also has an effect on the fish prices. The unrest in the Northern Province could also contribute to the distribution difficulties and may tend to upscale the prices. Almost all prices of food items and other consumables could go up on the increase of transport costs. The largest share of Sri Lanka’s import bill is for importation of oil. Any oil price shock, due to unrest in the middle east, terrorism, political volatilities or lack of supplies due to other reasons could see a sharp increase in the oil prices. When petrol and especially diesel prices go up, all price levels tend to increase. The high cost of living can be generally attributed to the escalating oil prices.

Since a country cannot be self sufficient in every way, it is difficult to find a solution for the rising prices in isolation. Cultivation of rice, vegetables and fruits may generally lower their prices.

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