The Value Of Our Money Is Shrinking

Salam…

“Relatively lower input costs from the lower price of oil will mean the expected increase in inflationary pressure may not take place, adding that the lower factory orders globally meant less power would be consumed” – these were the view of an economic specialist Mr Manokaran Mottain when asked by a well renown newspaper reporter on inflation.

So, what is inflation? A layman’s definition would be our money won’t buy as much today as we could the day before. This means that our purchasing power shrinks relatively. As an instance, a Ringgit today could get us three pieces of cake but not anymore in the future. Therefore, it decreases the value of money and makes things cost more expensive.

What causes inflation? In general, inflation occurs in an economy when people demand more than what is available in the market. Here, there is a shortage of supply in the market against the demand and this enables or forces the seller to raise the selling price. Hence, a buyer would have to fork more money than what he used to pay before. This can be measured as Consumer Price Index which illustrates statistical estimate on changes in the price level.

What are experts advises in coping with inflation? Amongst the most popular advise would be - spend wisely (I know that....). In my opinion, I trust it makes sense if we invest on things that are reasonable, appreciative or promise return rather than it depreciates and risk losing. Then, it shall create more value on our hard earned money.

Anyway, as for my case, I tend to write this article purposely because recently, my wife expressed her wishes to me in replacing that lovely five year old Kancil of hers. So, in order to keep her driving that cute and petrol saving car, I think of using the above lengthy narration as a reason. I hope she buys it and of course it will make me richer. Ha..ha..ha.. :-)

See ya...

Rhymee