Inflation has struck the country again and there’s a lot of misinformation going around. Between reports of economic collapse and worldwide food shortage, it can be hard to distinguish fact from fiction. Parents are scared for the wellbeing of their children and what this could mean for their future. But let’s pump the brakes for a minute. What do we really know about inflation other than what online fearmongers post on TikTok and Facebook? Here are some myths about inflation that every parent needs to know; and the actual facts behind the fiction.
Myth 1: Inflation is Bad
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Well, that depends. Small inflations actually indicate a healthy economy. It means there is a large demand for goods and services and that people are willing and able to afford them. A good inflation percentage would be anywhere around 2%. Anything over that limit and it becomes a problem. While smaller inflation rates do contribute to the growth a country’s wealth, it is indeed bad for individual low-income families. There are many groups that thrive during inflation season more than others like debtors. Malaysia’s current inflation rate as of July 2022 is around 2% to 3%. So, it’s definitely teetering on concerning at the moment. While the inflation rate is not nearly as bad as in other country, it is still bad for those of us who are living pay check to pay check.
Myth 2: Inflation Is the Government’s Fault
While certain government policies can and do contribute to inflation, there are some cases where inflation happens regardless of any governmental interference. The most common cause of inflation is rising demand for goods and services beyond the capability of industries and factories to supply them. The July 2022 inflation for instance that is currently causing prices of everyday household items to rise exponentially is caused by the pandemic. From mass lay-offs to decelerated productions, COVID-19 has caused the supply of basic household goods and services to drop drastically. Now that the economy is back and running, there is a shortage of manpower and raw material needed to produce food products. This in turn causes industries to charge more in order to keep up with the demand.
Myth 3: Inflation Only Affects Consumer Prices
End consumers will often interpret inflation as one thing: price hikes. And while that is always a serious problem, inflation also affects all aspects of the economy. Cost of living, employment, salary wages, tax policies, interest rates, and even debt. While all of these elements do involve money one way or the other, it goes to show that inflation affects not just the price of eggs and chicken, but also investment opportunities with international enterprises. While that seems inconsequential for an end consumer, it does mean that many businesses will suffer, including those that may be responsible for manufacturing your favourite food products.
Myth 4: Inflation Only Affects Individual Countries
Yes and no. International trade is everywhere. We as countries may be separated by oceans, but that doesn’t stop us from exchanging our goods and services. Depending on a country’s currency and inflation rate, international trading partners will either benefit or lose from rising prices. Many countries depend on each other for raw material. Malaysia’s most major imports and exports include petroleum, natural gas, palm oil and chemicals. However, these small country-specific inflations are common and not as problematic.
Myth 5: There’s Nothing You Can Do to Stop Inflation
One of the key factors that drive inflation is increasing consumer demand. So as long as people are out here buying stuff, factories and manufacturers will have to struggle to keep up with the demand despite running out of raw material and workers. While it’s important for us to urge the government to fix their policies, there are actually steps you can take as an individual to help stabilise inflation in the country. This is by spending less. It’s that easy. Even if you are well-off with thousands of disposable incomes in your bank account, you can still help the less fortunate and low-income families by not spending too often and too much.
Debunking Inflation Myths
Don’t get me wrong, inflation in Malaysia has never been easy for anyone. Let alone those with families and many mouths to feed. But it’s inevitable. However, that doesn’t mean we can’t educate ourselves a little bit more so that we can make the best decisions for ourselves and our loved ones. The one thing to remember is to always resist the urge to overindulge. Live below your means. Set a savings plan. Learn to save money. Rising world populations will always result in rising demand for goods and services. And not just food. There will continue being inflations in the future unless we can learn to control our spending. But all in all, keep these myths in mind so that you can help dispel them for others. Perhaps in time once as we become more educated on price hikes, we’ll be able to breeze through future inflations with not a single hair out of place.
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