I, For Insidious Inflation Irritates I

Urgh, grandparents and their rickety rackets about how the good old days were can drive people insane.  “Back in my day, we had no Facebooks or Snapchats, we talked to each other.  Face to face!  We didn’t use that Friendster on that Internet.  We had no Internet back then.  We wrote letters.”  Gee, why not just say you used courier pigeons to transport secret codes during World War 2?  Actually, that is very honorable.  I apologize, but nonetheless hard to take somebody who thinks Friendster is a current trend seriously.

“Back in my day, a bowl of noodles was a mere 20 cents.  Now, you folks have to fork out 4 dollars for a small plate of noodles.”  Oh yeah?!  Well…  Well…  Okay, you got me there.  Inflation is like a tumor.  It doesn’t kill you immediately but it builds and builds and one day, it’s too late.

Malaysiakini published some comments given by its readers recently and the most jaw-dropping comment was reserved as the title of the article containing the comments, “I earn RM15,000 a month and even I feel the pinch”.  Ouch.  Unfortunately, that reader did not elaborate more.  However, there are several insightful opinions to be found in the article.  Just ignore the political and conspiracy chatter when you’re reading it if you are looking to avoid sensitive issues.

I think it’s important to talk about inflation.  That’s because if you didn’t study Economics 101, inflation is the equivalence to the devil reaching into your pocket and taking your wallet away.  And no, nobody likes paying more for the same thing, even if it turns out to be a small increment.  “A dollar?!  How dare you?!  It used to be 80 cents!  I’m not paying the extra 20 cents!”

However, this is where hypocrisy sets in because inflation is necessary.  It is not desirable but given the expanding population and constant printing of new money, it is no longer scarce.  An old 20 cents coin is rare and is therefore valuable.  But nowadays, a modern 20 cents coin is often seen and touched, especially if your night job is scooping up coins from a wishing fountain.

Inflation pretty much decreased the scarcity of money.  And since it is not as valuable, it is by default devalued.  I would have given you a year’s supply of what you want for that lucrative iPhone in 2009 but iPhones are no longer rare.  They are everywhere.  I am going to need to charge you more than one iPhone.

Also, when you put your money in your bank, notice how your cash increases when you put it in a special account or a term deposit?  Do you think those interest rates fall from the sky?  And on the 8th day, God said “Let there be interest rates, charge it to the guy on fire down below.”  No, you are responsible for more money existing in the market.  Feel guilty of your investment, yet?

But by the end, a Regular Joe is not going to see that.  All he sees are prices rising and his salary remaining stagnant.  That’s…  Sad…  There is clear frustration.  That is undisputable.  However, I believe it is important to separate the rational anger from the irrational anger in order to better understand shoppers and serve their needs.

Inflation cannot be combatted, like globalization.  However, it is important to hear the voices of the shoppers and respond accordingly.  After all, they are the ones responsible for your business.  And if businesses fail to understand what consumers want, your only customers left will be descendants of the World War 2 courier pigeons.