Financial news: When inflation strikes hard and fast

Financial news: When inflation strikes hard and fast

Malaysia’s inflation is always ‘known’ as 3%

Anyway, below image shows the inflation for subgroup food and beverages. It’s rising and many are twice the often thought number. There’s hardly any change or very small change for clothing & footwear, alcoholic beverages and tobacco (these are price controlled), health, communication and electricity and water.

However, restaurants and hotels are up 6.8% while food and non-alcoholic beverages (which is not price controlled) are up 6.7%. If we spend a lot of money on these two and our salary increment last year was less than 6.7 / 6.8 percent, it meant that our purchasing power for these items has reduced. We could buy less with the same amount or we have to pay more to get the same quantity. This is why the government must help Malaysian which has fallen into the poverty category.

Inflation is not confined to Malaysia

In one of the most advanced nations in Europe, Sweden’s visible signs of poverty are becoming ever more visible.

Article in malaymail.com Hit by the highest inflation in more than 30 years and poised for recession, Sweden’s visible signs of poverty are mounting amid rising inequality.

“So many people are coming here to breakfast,” said Kavian Ferdowsi who runs a charity helping the homeless.

“In the 13 years that I’ve run this, we’ve never had so many people,” he told AFP as his colleagues served up cinnamon buns and coffee.

Sweden has been hit hard by the effects of the war in Ukraine. Its currency, the krona, is weaker than it has ever been against the euro, and aggressive interest rate hikes have left many households with hefty mortgages payments.

After a spike in electricity prices at the start of the winter, food prices are now Swedes’ main concern, up 20 per cent from a year ago.

Inflation has hovered stubbornly around 12 per cent since November, according to official statistics on Wednesday.

“The first wave of inflation was just energy prices and some import prices. But now it has spread to the entire economy,” said Annika Alexius, a Stockholm University economist. Do read the full article here: Article in malaymail.com

When currency weakens and the central bank increases rates

Bank Negara Malaysia has chosen to maintain the Overnight Policy Rate (OPR) unchanged. The reason is to be accommodative to the economy. Some say this will cause the ringgit to weaken. The currency which should weaken is the one who kept suffering from trade deficits because people DO NOT NEED your exports. Yet, you are importing so much from other countries that all these countries’ currencies should appreciate against yours. Do read the full article here: OPR maintained. Negative?

Work hard and stay ahead of inflation

It’s impossible to stop the inflation. If it could be stopped, some of these so-called advanced economies would have been able to do it. This is why the only way to fight inflation is to run ahead of it. Earn more than the rate of inflation and one would be just fine. Hedge against inflation by investing. Property could be one. Stocks with good dividends may be another. Perhaps even occasionally taking up a part-time role. Just a little extra and the earnings would cover the effects of inflation. Hopefully inflation will stay slow and we are able to face it better.

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