Inflation is generally the increase in the overall prices of goods and services within a region or area. When there is inflation purchasing power reduces. Purchasing power deals with the ability of the financial resources a person has to purchase a certain amount of goods or acquire certain services. Simply put, in times of inflation you cannot buy the same amount of goods with the same amount some time ago but you will need more to get the same amount of goods. This situation can be very disturbing, though it has some benefits.
In this article, I draw the attention of readers to the inflation rates for various items and the overall rate recorded for the month of August and proffer some ways of cushioning the impact that inflation poses.
The Acting Government Statistician, Mr Baah Wadieh, is cited by Citibusiness as reporting that the overall inflation rate for the month of August of 2018 is 9.9% as against 9.6% for July 2018, a 0.3% increase. The simple meaning of this is that in general terms, every item in the country will see a 0.3% increase. For example, a mobile phone which was bought for GHC200.00 will now cost GHC206.00, in the same way a shoe will costed GHC50.00 in July will now be selling at GHC51.50.
In his reporting, Mr Wadieh indicates that the overall inflation increase has been driven by a number of factors or items (food and non-food) increasing in price.
He gave the following items and their corresponding rates: Coffee, tea and cocoa at 11.3%, Fruits at 10.6%, Meat and meat products at 10.0%, Mineral water, soft drinks, fruit and vegetable juices at 9.3% and Vegetables at 8.4%. Consumers of these foods should therefore expect to pay more for the same amount they consume.
“The main ‘price drivers’ for the non-food inflation rate were Clothing and footwear at 15.2%, Transport at 15.1%, Recreation and Culture at 13.9%, Furnishing, Household Equipment and Routine Maintenance at 12.6% and Miscellaneous goods and services at 11.9%”, Mr Wadieh stated as cited by Citibusiness. The implications of this is clear: persons who delight in dressing, travelers and those who love to visit recreational areas should be ready to pay more. Also, people who are putting up structures for office or residential use and as such will need some furniture and household logistics should also be set to pay more.
Businesses and individuals who engage in importing of goods will also not be spared as inflation for imported goods has also risen. “Mr. Wadieh stated that the inflation rate for imported items was 11.7% in August 2018 compared with 11.5% recorded in July 2018”, Citibusiness reports.
The picture created in this article therefore requires that measures are instituted by individuals and organizations alike to mitigate the debilitating effects of inflation. Some of these include:
According to Wise Bread, the following can help:
- FOR INDIVIDUALS
- Maintain low amount of cash with you
- Invest cash to yield you returns in the future but do not invest in bonds and other long-term fixed rate loans (loans that take a relatively long time to mature and pay a specific return)
- Invest in commodities other than cash, for example purchase of goods for sale
- FOR BUSINESSES
- Engage in vertical integration, (the combination in one firm of two or more stages of production normally operated by separate firms, Wikipedia).
In ending, I make a humble call on all and sundry, especially the government to rightly position ourselves to make the best out of every inflationary moment.
By: Isaac Nana Opoku/business.com.gh