When everyone hears the word “inflation a variety of reactions is registered. To the jeepney driver it is the rising cost of spare parts and oil, for the housewife it’s increase in the cost of her groceries, and to the struggling minimum wage earner it’s his cost of transportation, daily food consumption and his version of a weekend gig.
Inflation, “a general increase in prices and fall in the purchasing value of money,” is an economic phenomena that we just accept as is! Most economist will describe the three possible causes of inflation: 1) inflation caused by increases in wages that push producers to increase their prices to compensate the increase of labor; 2) increase in consumer demand due to available of Credit and 3) when there is too much money in circulation as in when Government prints more money to cover their deficits.
Whatever is the reason for the increase in the inflation rate, people’s immediate reaction is focused on how to survive it! We therefore see people changing their lifestyles i.e. limiting their family spendings to what is necessary and important (deferring weekend entertainment), cutting budget for food and groceries, or finding additional livelihood to augment their current sources of livelihood. With this situation, everyone forgets to save (as there is nothing more to save!).
So how can Juan survive increase in inflation?
For the families – stick to your family budget! Focus when the income is coming, how much is coming and how will it be used? Reduce the “fat,” so to speak! Look for ways to increases your family income.
To the SMEs – keep your Operations to the barest. Do away with extra expenses that you normally spend for like keeping temporary help. Limit your fixed expense like rent by maximizing current spaces. Find ways to keep your costs to the minimum. Find alternative suppliers who can give you competitive prices and extra days to pay your credit.
For big companies, it is not always increasing your prices to maintain your revenues. Examine your below the line spendings. Defer disbursing for expenses that could be deferred e.g. advertising, promotions and the like. Accelerate collection and be more selective in credit granting.
For their part, government help us contain inflation. In some instances, they issue price control measures, they pump prime the economy with basic commodities (that is why we are being flooded with imported NFA rice). Providing employment opportunities (job fairs), and preventing spiraling of prices by keeping watch on the price of oil.
Inflation – yes we can face them and we can survive them. Knowing the Filipino spirit, we can beat inflation.