Rising Income Fails to Alleviate Economic Pressure on Sri Lankan Households

Despite a quantitative increase in income for the average household in Sri Lanka, many are grappling with significant economic pressure, largely due to a sharp decline in their purchasing power, as highlighted by the Institute of Policy Studies (IPS).

This ongoing situation reveals a growing divide, with vulnerable populations continuing to sink deeper into economic distress, while the wealthiest are witnessing an uptick in their earnings, resulting in exacerbated social inequality.

Dr. Pulasti Amarasinghe, a researcher at IPS, provided insights after analyzing preliminary data from the 2025 Household Income and Expenditure Survey released by the Department of Census and Statistics. According to the findings, the average monthly household income, which stood at 62,237 rupees in 2016, is projected to increase to 120,266 rupees by the early part of 2025, marking a nominal growth of 93 percent. However, when factoring in the intense inflation of recent years, there has been no real enhancement in the living standards of the populace.

In real terms, the average monthly household income recorded in 2016 was 43,511 rupees, but is expected to decline by 4.3 percent to 41,623 rupees by 2025. Notably, while this income had shown a positive trend, growing by 7.6 percent between 2016 and 2019, it has now been projected to fall by 11.1 percent relative to the 2019 levels by 2025.

Dr. Amarasinghe pointed out that the impact of the economic crisis has not affected all societal strata equally. He noted that while the real incomes of the poorest segments have plummeted, earnings among the top 20 percent have surged, with growth rates soaring between eleven to fifteen times that of lower-income groups. This disparity indicates a troubling trend, confirming that the broader economic indicators do not necessarily reflect the severe reality faced by many households across the nation.

Against this backdrop of uneven economic recovery, projections suggest that the poverty rate in Sri Lanka could rise to a troubling 16 percent by 2025. The data underscores a crucial distinction: while the overall economy may stabilize, the economic recovery for average households remains elusive, as reiterated by the report's findings.