Inflation a global phenomenon

Inflation a global phenomenon







AFTER the Covid19 pandemic with more than two years of the breakdown of normal life with people mostly staying home, many manufacturing and agricultural businesses were locked down, many hotels and restaurants had no business, many small businesses closed down with no customers, and transportation industry became almost bankrupt with no riders and many governments almost broke with no sales tax and other income.

Sri Lanka is a good example of a broken government. As a result of all these phenomena like low production, goods not moving properly and people not spending money, there was a lockdown of everything.

Now that all nations are slowly coming out of this lockdown, there are more demands for goods and supplies and enough is not available. Higher demand and lower stock result in higher prices. Also, the business people who did not make any money for two years increased the price of services and goods to make up for their losses.

As a result of all these, the prices of goods and services went up all over the world. In other words, inflation is a global phenomenon. The price of gasoline also went up in the global market, one of the reasons they say is the Ukrainian war. Maybe the war made it worse.

Depending on the financial capacity, production and transportation capabilities of goods including food items, produce etc, inflation in each country is different. In the USA they say average inflation is 8 percent while in India they say it is15 to 20 percent. For middle and low-income people it feels like double the government-produced data. Inflation affects low-income people more because they live on an income that does not cover their real expenses.

Last week when we wrote an editorial on how the price hikes are affecting the people in Kerala or India, it is the true situation in India and also true in many poor countries all over the world. Poverty in the world almost doubled in these countries because of Covid-19. It will take many years for these countries to get out of this condition, while most of the rich nations can survive the impacts in a couple of years

The global state of affairs as a result of the Covid-19 pandemic also had an impact on the lifestyle and work culture of the new generation of adults between the ages of 25 to 45. They never expected a lockdown of their daily life in such a big way. They never knew that most jobs can be performed online while staying at home and they found out that there is a life without hanging out in a bar or other places. Most of them instead of eating out either got deliveries at home or cooked at home.

High inflation is not going to disappear. These high prices will stay for a long time and people will get used to it.

How can we help bring down the prices? First, increase the production and storage of goods and supplies including agricultural products. During the pandemic gasoline demand and production also went down. The sudden increase in activities including manufacturing and movement of goods increased the demand for gasoline and therefore, prices went up skyrocketing. These high gasoline prices made the inflation situation worse by increasing the cost of transportation.

Since the pandemic, everything has become a global phenomenon. It never used to be like that. Inflation is here to stay. The prices will remain high and people will get accustomed to high prices for everything. There is still a shortage of many items.

In the USA there is a shortage of baby formula, in Brazil, there is a shortage of fertilizers resulting in the shortage of food grains production, and there is global storage of food grains, which was made worse by the Ukraine war - Ukraine being the producer a high percentage of food grains requirements in the world.

With more money flowing in the world, more economic activities are taking place, while there is a shortage of goods and agricultural products. Therefore, prices are not going down any time soon and may never happen.

Low and moderate-income people have to get used to this and adjust their lifestyles, by producing agricultural products at home in vegetable gardens, cooking at home rather than eating outside and reducing the purchase of luxury products. If the whole world does it, you may see a deflation.