HOW DOES INFLATION AFFECT CONSUMERS PART XIV

WALKING INFLATION IS WHEN PRICES GO UP 3-10% ANNUALLY. ANY PERCENTAGE BETWEEN THE GIVEN NUMBERS COULD DO AS LONG AS IT FORCES PEOPLE TO START STOCK SAVING IN THE ANTICIPATION OF FURTHER INCREASE IN PRICES. THIS LEADS TO A HIGH DEMAND IN STOCK BUT A SHORTAGE IN SUPPLY WHICH INCREASES THE PRICE FURTHER FOR MORE PROFIT. 

GALLOPING INFLATION IS WHEN PRICES INCREASE BY 10% OR MORE ANNUALLY. THIS IS DEVASTATING FOR AN ECONOMY AS IT DRIVES OUT FOREIGN INVESTORS. ONE REASON FOR IT IS THE FLUCTUATIONS IN THE VALUE OF THE CURRENCY. INFLATION IS MEASURE ON A CONSUMER PRICE INDEX (CPI). THIS INDEX NOTES THE INCREMENT CR A DECREMENT OF PRICES OVER A SHORT OR LONG PERIOD OF TIME. CPI DOESN’T MEASURE EVERYTHING IN THE SAME BRACKET. FOR EXAMPLE, WHILE THE PRICES OF VEGETABLES OR FRUITS MAY BE THE SAME OR FACE A SMALL INCREMENT OVER TIME, THE PRICES OF FUEL REMAIN ERRATIC. 

THEY SOMETIMES FACE AN INCREMENT OR A DECREMENT DEPENDING ON THE GEO-POLITICAL SCENARIOS OF THE SAID TIME. UNCONTROLLED INFLATION ALMOST ALWAYS HAS AN ADVERSE EFFECT ON THE ECONOMY OF A PERONWHO HAS A SALARY OF RS100,000 COULD GET HIS HOUSE IN ORDER BY SPENDING AROUND RS75,000 ON NECESSITIES OF LIFE AND STILL SAVE AROUND RS25,000. BUT AS INFLATION HITS THE MARKET, FOR EXAMPLE, THE PRICE OF PETROL PER LITRE INCREASES, NOW THE PERSON HAS TO PAY MORE TO GET THE SAID LITRE OF PETROL, BUT THE OTHER BASIC ACCOMMODATES OF LIFE GET EXPENSIVE AS WELL. TRANSPORTATION COSTS GET HIGHER WHICH LEADS TO FOOD GETTING MORE EXPENSIVE BECAUSE IT’S MORE EXPENSIVE NOW TO TRANSPORT THE VEGETABLES AND THE FRUITS FROM THEIR FARMS TO THE SHOPS AND STORES.

THUS CHAIN OF EVENTS CONTINUES AND BASICALLY CREATES A HUGE BURDEN ON THE ECONOMY OF A CONSUMER WHO COULD AFFORD TO BE LAVISH BEFORE BUT NOW HAS TO BE CAREFUL IN ORDER TO SAVE FOR  THE VERY XBOX HE WAS SAVING THAT’S COINCIDENTALLY ALSO HAS GOTTEN A BIT MORE EXPENSIVE. NOW, THE EVENT MENTIONED ABOVE IS A BIGGIE FOR A CONSUMER BELONGING TO A HIGHER CLASS BUT INFLATION BECOMES A HUGE HEADACHE TO MIDDLE AND LOWER MIDDLE CLASS FAMILIES WHO JUST BARELY MAKE DO WITH THE INCOME THEY GET. SO TO PUT IN GENERAL TERMS, INFLATION BASICALLY RAISES THE COST OF LIVING. WHAT IT ALSO DOES IS INCREASE THE POVERTY IN A COUNTRY. 

NOW THERE ARE MORE CHILDREN WHO GO TO SLEEP HUNGRY BECAUSE THEIR FATHER WHO WAS BARELY ABLE TO BRING BREAD AND BUTTER HOME AFTER A DAY’S HARD EARNED PAY COULD NOT AFFORD TO DO SO ANYMORE. IN ONE WAY OR ANOTHER, INFLATION IS A FACE OF LIFE. IT AFFECTS US ALL, THE CONSUMERS AND INVESTORS BOTH, AS BOTH ARE EFFECTED BY THE RISING PRICES OF RAW MATERIALS.

EFFECTS OF INFLATION ON DIFFERENT SECTS OF SOCIETY ARE OVEN BELOW.

DEBTORS AND CREDITORS WITH RISING INFLATION, DEBTORS HAVE A MAJOR GAIN WHILE CREDITORS FACE LOSE LOSSES. MONEY FACES DEVALUATION DUE TO RISING INFLATION AND THUS THE DEBTORS EASILY RETURN THE MONEY WHICH IS NOW HAVING LESS VALUE IN TERMS OF GOOD. THE REASON BEING THAT THE VALUE IS NOW LESS THAN THE TIME THEY BORROWED IT.

SIMILARLY, DUE TO DEVALUATION